Financing Flashcards
(25 cards)
Name Mortgage Loan Elements
P.I.T.I.
Principal
Interest
Taxes
Insurance
Sometimes Private Mortgage Insurance
What are the 3 ways to pay off a loan?
Term (also a straight) Loan
Fully amortized loan
Partially amortized loan
Term loan is also known as
A straight loan or an interest-only loan
What loan type has a balloon payment at the end of the loan
Partially amortized loan
What type of loan has a zero payment at maturity?
Fully amortized loan
features of a promissory note
Borrower & lender
promise to repay
amount of debt
terms of repayment
interest rate
Mortgage
Pledge of property as collateral against a debt
Creates a lien
Elements of a Mortgage
Acceleration clause
Defeasance clause
Alienation clause
Power of sale clause
Definition of acceleration
Lender can call the loan early due to non-payment
definition of defeasance clause
Loan is paid off or “defeated” and recorded
definition of Power of Sale
Gives mortgagee (lender) right to foreclose without going to court (non-judicial foreclosure)
definition Loan-to-Value
Maximum percentage of value that a lender will load.
Based on the lesser of appraisal or price
Discount points
Buyer buys points for interest rate discount.
1 point costs 1% of the loan amount
definition of Ursury
charging an interest rate about the legal maximum
What are the 5 major types of Loans
Conventional
Insured Conventional
FHA
VA
USDA
Which loan type requires a 20% down payment
Conventional
Which loan type allows for less than a 20% down payment
Insured Conventional
Which loan type allows for a loan-to-value greater than 80%?
Insured Conventional
Definition of a Package Mortgage
Covers real estate and personal property
Which loan type includes a partial release clause?
A blanket mortgage.
(Used primarily for developers building out sub-divisions. As lots are developed & sold the loan is “partially” released for that lot.)
Home Equity Loan vs. Home Equity Line of Credit
Loan is for a set amount and creates a second mortgage
Line of Credit - borrower can take advances against the equity in their home. Not a loan. Can make withdrawals at will.
definition bridge loan
A short term loan for buyers to bridge the gap between buying a new home and selling existing home.
What loan type has lower payments at the beginning that increase gradually over 3 to 7 years?
A graduated payment mortgage
What loan type includes P.I.T.I.?
A budget mortgage.
ALSO fully amortized
