AZ Real Estate Agent License 2020 > Finance Basic 6 > Flashcards

Finance Basic 6 Flashcards

(42 cards)

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1
Q

Motivations (Borrower) -

  1. Oppurtunity: (Financing) Couldn’t become H_____ Any Other Way
  2. Leverage: Increase R___ of R____ by Using Borrowed Money
  3. Tax Advantage: Interest is T__ Deductable
A

Motivations (Borrower) -

  1. Oppurtunity: (Financing) Couldn’t become Homeowner Any Other Way
  2. Leverage: Increase Rate of Return by Using Borrowed Money
  3. Tax Advantage: Interest is Tax Deductable

Chap 6

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2
Q

Original Loan Amount or Current Loan Balance is?

A

Principal in Loan -

Original Loan Amount or Current Loan Balance

Chap 6

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3
Q

L______

Increase of Rate of Return - Using Borrower’s Money

A

Leverage -

Increase of Rate of Return - Using Borrower’s Money.

Chap 6

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4
Q

Motivated by High Yield**, **Low Risk and Good Security

A

The Lender -

Motivated by High Yield**, **Low Risk and Good Security

Chap 6

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5
Q
  1. Personal Promise to Repay - Serves As Evidence of Debt.
  2. No Collateral Referenced
  3. States Parties; Amt of Debt; Rate; Pattern of Pymts
A

Promissory Note -

  1. Personal Promise to Repay - Serves As Evidence of Debt.
  2. No Collateral Referenced
  3. States Parties; Amt of Debt; Rate; Pattern of Pymts

Chap 6

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6
Q

P_______ N____

States:

  1. Lender/Borrower,
  2. Debt Amt,
  3. Rate,
  4. Pattern of Pymts
  5. No Collateral Stated
A

Promissory Note

States:

  1. Lender/Borrower,
  2. Debt Amt,
  3. Rate,
  4. Pattern of Pymts
  5. No Collateral Stated

Chap 6

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7
Q
  1. Hypothecates Property as Collateral, with Provisions to Foreclose.
  2. States Legal Description and
  3. Recorded by Lender.
A

Mortgage or Trust Deed -

  1. Hypothecates Property as Collateral, with Provisions to Foreclose.
  2. States Legal Description and
  3. Recorded by Lender.

Chap 6

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8
Q

Level Payments of Principal and Interest Only

A

Amortized - P&I

Level Payments of Principal and Interest Only

Chap 6

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9
Q

“One Payment” is Larger than Monthly Payments. May be Partially Amortized with Last Payment being a Baloon.

A

Balloon Payment -

“One Payment” is Larger than Monthly Payments. May be Partially Amortized with Last Payment being a Baloon

Chap 6

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10
Q

PITI Payments - Principal, Interest, Taxes and Insurance are called?

A

Budget -

PITI Payments - Principal, Interest, Taxes and Insurance

Chap 6

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11
Q

Str_____ Loan aka Int___ Term Loan/T____ Loan -

Interest Only Payments. Principal Due at End of Loan

Example: Construction loans.

A

Straight Loan aka Interim Loan/Term Loan -

Interest Only Payments. Principal Due at End of Loan

Example: Construction Loan

Chap 6

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12
Q

Principal Only Payments (Amoritized) and Interest Added to Loan Balance.

A

Negative Amortization -

Principal Only Payments (Amoritized), and Interest Added to Loan Balance

Chap 6

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13
Q

Payments on Real Estate Loans:

Are They Paid in Advance or in Arrears?

A

Arrears -

Payments on Real Estate Loans“Paid in Arrears.”

Chap 6

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14
Q

Type of Loan that is Insured by Federal Housing Admin, HUD

A

FHA Loan -

Insured by Federal Housing Admin, HUD

Chap 6

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15
Q

Guaranteed by the Dept of Veteran’s Affairs

A

VA Loan -

Guaranteed by the Dept of Veteran’s Affairs

Chap 6

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16
Q

Made by Lending Institutions but Without Government Guarantee or Insurance.

A

Conventional Loan -

Made by Lending Institutions but Without Government Guarantee or Insurance.

Chap 6

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17
Q

Buyer has Insufficent Down Payment, and Seller becomes Lender (Seller CarryBack Financing)

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A

Purchase Money Loan -

Buyer has Insufficent Down Payment, and Seller becomes Lender (Seller CarryBack Financing)

  1. 200 SP
  2. 120 1st Balance
  3. 80 Seller Equity
  4. (50 Buyer Down From Slr Equity)
  5. 30 To Seller (Seller Carr Back)
  6. 120 New Lender Loan

Chap 6

18
Q

W________ Loan -

  1. Seller Remains Liable for Existing Loan.
  2. Seller Creates New Loan for Buyer for Greater Amount (which includes 1st loan) and a Higher Interest Rate.
  3. Buyer** Takes - **No Liability for Existing Loan.
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A

Wraparound Loan -

  1. Seller Remains Liable for Existing Loan.
  2. Seller Creates New Loan for Buyer for Greater Amount (which includes 1st loan) and a Higher Interest Rate.
  3. Buyer** Takes - **No Liability for Existing Loan.

Chap 6

19
Q

In this Loan, Rate Adjustments are Tied to

  1. (MTA) Monthly Tr_____ Av_____
  2. (LIBOR) London Interb___ Offered R___
Study These Flashcards
A

Adjustable Rate Loan (ARM) -

Rate Adjustments Tied to:

  1. (MTA) Monthly Treasury Average
  2. (LIBOR) London Interbank Offered Rate

Chap 6

20
Q

Loan Secures More than One Property.

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A

Blanket Loans -

Loan Secures More than One Property

Chap 6

21
Q

P______ Loan -

Loan includes Items of Personal property. (Refrigerator, Range, etc)

Chap 6

Study These Flashcards
A

Package Loan -

Loan includes Items of Personal property. (Refrigerator, Range, etc)

Chap 6

22
Q

O___ E__ Loan -

Allows Borrower to Borrow More Funds in Same Loan. (Example: Home Equity Line of Credit - HELOC)

Study These Flashcards
A

Open End Loan -

Allows Borrower to Borrow More Funds in Same Loan. (Example: Home Equity Line of Credit - HELOC)

Chap 6

23
Q

Con________ Loan aka Interim Loan

  1. Funds Advanced in Installments as Things Progress.
  2. Interest Only Payments. Principal Due at Maturity of Debt.
  3. Short (Term) Loans or Interim Loans.
Study These Flashcards
A

Construction Loan aka Interim Loan -

  1. Funds Advanced in Installments As Things Progress.
  2. Interest Only Payments, Principal Due at Maturity of Debt.
  3. Short (Term) or Interim loans, Straight loan.

Chap 6

24
Q

T____-O___ Loan -

To Pay-Off Construction Loan - Buyer Takes Long Term Financing or Permanent Loan.

Study These Flashcards
A

Take-Out Loan -

To Pay-Off Construction Loan - Buyer Take Long Term Financing or Permanent Loan.

Chap 6

25
**G\_\_\_\_, Sw\_\_\_\_\_ or Br\_\_\_\_ Loan** **Short Term Loan** to **Allow Buyer to _Borrow Funds for Down Payment_** **for Another Property.** Used to **Bridge The Gap** **_between_** **Construction Loan and Take-Out (Permanent Buyer Loan)**
**Gap, Swing, or Bridge Loan** - **Short Term Loan** to **Allow Buyer to** **_Borrow Funds for Down Payment_ for Another Property.** Used to **Bridge Gap between** **Construction Loan** **and Take-Out loan** **(Permanent Buyer Loan)** **Chap 6**
26
**R\_\_\_\_ Ann\_\_\_ M\_\_\_\_\_ (RAM)** **_Lender Pays_** **_Borrower_ - Monthly Payments** **- For this Type of Loan**
**Reverse Annuity Mortgage (RAM)** - **_Lender Pays_** **_Borrower_ - Monthly Payments - For this Type of Loan** **Chap 6**
27
## Footnote **Loan with Highest Priority**
**Superior Loan -** **Loan with Highest Priority** **Chap 6**
28
**J\_\_\_\_ Loan -** **Loan which has Lowest Priority to Another Loan**. Different Lien position than 1st. **Subordinate Loan** **Subordinate - Lower In Rank**
**Junior Loan -** **Loan which has Lowest Priority to Another Loan**. Different Lien position then 1st. **Subordinate Loan** **Subordinate - Lower In Rank** **Chap 6**
29
**N\_\_-R\_\_\_\_\_\_ Loan** - **_Borrower Not Held Liable_**. **Lender Can Sieze Collatoral** but **_No Further Compensation_** From Borrower.
**Non-Recourse Loan** - **_Borrower Not Held Liable_**. **Lender Can Sieze Collatoral** but **_No Further Compensation_** From Borrower. **Chap 6**
30
**Acc\_\_\_\_\_\_ Clause** - **Due and Payable** upon **Default (Think Fast!).**
**Acceleration Clause** - **Default** **Due and Payable** upon **Default (Think Fast!).** **Chap 6**
31
**A\_\_\_\_\_\_\_ Clause** - **Due** and **Payable _Upon Sale_, Upon Transfer of Ownership**
**Alienation Clause** - **Due** and **Payable _Upon Sale_, Upon Transfer of Ownership** **Chap 6**
32
**Pr\_\_\_\_\_\_\_ P\_\_\_\_\_\_ Clause** - **_Lender Yield Maintenance_ Clause**. **Used if _Loan Paid-Off Early_.**
**Prepayment Penalty Clause** - **_Lender Yield Maintenance_ Clause****Used If _Loan Paid-Off Early_.** **Chap 6**
33
**De\_\_\_\_\_\_\_\_ Clause** - **Borrower Pays-Off**, **Mortgage and Note Null and Void**
**Defeasance Clause** - **Borrower Pays-Off**, **Mortgage and Note Null and Void** **Chap 6**
34
**Sub\_\_\_\_\_\_\_\_\_ Clause -** **Calls for Existing Loan to be Placed in a Lower Position to Another Loan.** Lender Agrees to Waive his Rights in Favor of Another.
**Subordination Clause -** **Calls for Existing Loan to be Placed in a Lower Position to Another Loan.** Lender Agrees to Waive his Rights in Favor of Another. **Chap 6**
35
**R\_\_\_\_\_\_ Clause or P\_\_\_\_\_ Release** - **Allows Individual Parcels** to be **Released From Blanket Loan**
**Release Clause or Partial Release** - **Allows** **Individual Parcels** to be **Released From Blanket Loan** **Chap 6**
36
**N\_\_-Dist\_\_\_\_\_\_ Clause** - **Lender Agrees** **_Not To_** **_Terminate_ Tenant Leases**, **During Foreclosure** Note: **_Under Protecting Tenants at Foreclosure_**: **Tenant Gets** **90 day Notice to Vacate** or **Lease is honored to term.**
**Non-Disturbance Clause** - Lender Agrees **_Not To_** **_Terminate_ Tenant Leases**, **During** **Foreclosure** Note: **_Under Protecting Tenants at Foreclosure_**: **Tenant Gets** **90 day Notice to Vacate** or **Lease is honored to term.**
37
**P\_\_\_\_\_\_\_ G\_\_\_\_\_\_\_\_ Clause** - 1. **_Indicates_** **_Person Liable_ if Default Occurs - Used for Corps / LLC's**.
**Personal Guarantee Clause** - 1. **_Indicates_** **_Person Liable_ if Default Occurs - Used for Corps / LLC's**. **Chap 6**
38
**U\_\_\_\_\_** - **_Charging_** **_More Than_ Rate by Law**
**Usury** - **_Charging_** **_More Than_ Rate by Law** **Chap 6**
39
**C\_\_\_\_\_\_ Rate, No\_\_\_\_ Rate, Nom\_\_\_\_ Rate** - ## Footnote **Rate Specified in Note**
**Contract Rate, Note Rate, Nominal Rate** - ## Footnote **Rate Specified in Note** **Chap 6**
40
**If No Rate** **in Agreement, This Rate is Used**. **Also for Judgements** **unless Court Stipulates Different Rate**.
**Legal Rate** - **If No Rate** **in Agreement, This Rate is Used**. **Also for Judgements** **unless Court Stipulates Different Rate.** **Chap 6**
41
**Charge Made To - Borrow Money** (Usually Simple Interest)
**Interest -** **Charge Made To - Borrow Money** (Usually Simple Interest) **Chap 6**
42
**B\_\_\_\_ P\_\_\_\_ -** **One one-hundreth of 1%** - **Used to Indicate** **Increases or Decrease Interest Rate**. **.0001**
**Basis Points -** **One one-hundreth of 1%** - **Used to Indicate** **Increases or Decrease in Interest Rate**. **.0001** **Chap 6**
AZ Real Estate Agent License 2020
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