Finances Flashcards
What is the primary purpose of rental property investment financing?
To acquire properties that generate rental income.
True or False: A mortgage is the only way to finance a rental property.
False
Fill in the blank: The amount borrowed in a mortgage is called the __________.
principal
What is the term for the interest rate that remains constant throughout the life of a loan?
fixed interest rate
Name one common type of mortgage used for rental properties.
Conventional mortgage
Multiple Choice: Which of the following is NOT a factor in determining mortgage eligibility?
Property color
What does LTV stand for in real estate financing?
Loan-to-Value ratio
True or False: Higher LTV ratios typically indicate lower risk for lenders.
False
What is the purpose of a down payment in rental property financing?
To reduce the amount borrowed and show lender commitment.
Fill in the blank: A __________ is a loan secured by real estate property.
mortgage
What is a common term for financing provided by private investors or groups?
Private money lending
Multiple Choice: Which loan type typically requires a lower down payment?
FHA loan
True or False: Interest-only loans are common in rental property financing.
True
What does NOI stand for in real estate investment analysis?
Net Operating Income
Fill in the blank: The __________ is the total income from a property minus operating expenses.
NOI
What is one advantage of using leverage in rental property investment?
It allows for the purchase of more properties with less capital.
Multiple Choice: Which financing option typically has the highest interest rates?
Hard money loans
What is the primary risk associated with using high leverage in property investment?
Increased potential for loss during market downturns.
True or False: Rental income is not considered when applying for a mortgage.
False
What is an amortization schedule?
A table detailing each loan payment over time, showing principal and interest.
Fill in the blank: A __________ loan is one where the borrower pays only the interest for a set period.
interest-only
What is the role of a property appraisal in the financing process?
To determine the market value of the property.
Multiple Choice: Which document outlines the terms of a mortgage?
Mortgage note
True or False: A pre-approval guarantees that a lender will provide the loan.
False
