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Flashcards in Financing And Mortgages Deck (44):
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Alienation Clause

The clause in a mortgage the balance becomes due in full if the property is sold or otherwise transfers ownership ( such as foreclosure ) also known as a do-on sale clause

1

Amortization

The process of repaying a loan by making systematic payments of principal and interest over time until the balance is zero

2

Ballon mortgage

A mortgage will one final payment ,larger than any proceeding payment , pay off debt

3

Blanket mortgage

A mortgage secured by two or more Parcels of property

4

Certificate of reasonable value

A document issued by the veterans administration which is based on an appraisal and is intended to insure the veteran that the price being paid for a piece of property is reasonable

5

Commercial bank

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6

Construction mortgage

A mortgage designed to finance the building of a new home or other buildings.

7

Conventional mortgage

A mortgage that is not insured (FHA loan ) or guaranteed ( VA loan ) by the federal government. Includes loans backed by private mortgage companies( PMI )

8

Defeasance clause

A clause used in a lease or a mortgage to cancel a certain right when a specific condition has been met (example to cancel the granting clause to the bank when the mortgage has been fully paid )

9

Demand mortgage

Mortgage where the lender (mortgagee ) has a right to call the note to anytime

10

Direct Reduction mortgage

A mortgage with the monthly payment remains the same. The amount that goes towards interest decreases and the amount that goes toward principle increases over the life of mortgage

11

Disclosure statement

Notification from a lender to a borrower of financing terms and charges of a loan. required by the federal truth in lending law.

12

Equity

The value an owner has in property in excess of any mortgage or other liens.

13

F. H. A. Mortgage

A mortgage with the Federal housing administration FHA insures the bank against loss

14

Home equity loan

a loan secured by the equity in a piece of property Maybe in addition to an existing first mortgage and usually set up as a line of credit

15

Impound account

A trust account established to collect funds for the future needs of a parcel of real estate. Banks often establish impound accounts for taxes and insurance fees

16

Impound payment

A. Payment into an impound account

17

Imputed interest

interest assigned by law when a account does not state a specific rate

18

Investment

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19

Junior mortgage

Any mortgage that takes second priority to another lien on the property

20

Mortgage

A conditional conveyance of property as security for a loan (mortgage deed)

21

Mortgage buydown

The lender will allow the borrower to pay one or more points at closing in return for a low initial interest rate for one or more years. The borrower may then qualify for a larger mortgage loan

22

Mortgage deed

Conditional conveyance of the property to the bank subject to the Browers right of redemption. Referred to as the mortgage

23

Mortgage note

The written promise to pay money borrowed against real property as security

24

Mortgagee

Party lending money with property as security ( example a bank)

25

Mortgagor

Party borrowing money with property as security ( buyer or borrower )

26

Negative amortization

A mortgage with a monthly payment agreed to does not cover the interest charged. The difference is then added to the principal balance

27

Opened end mortgage

A loan that is expandable by increments but with a total that does not exceed original limits. The total secured by one mortgage

28

Package mortgage

A mortgage loan that finances personal property such as furniture as well as real estate

29

Point

A one-time charge for loaning money equal to 1% of the amount borrow

30

Pre qualify

Process whereby a loan originator reviews a buyer's financial status to determine in advance the amount of mortgage that will be approved

31

Primary mortgage market

The market where banks or other lenders loan money directly to Bowers ( those mortgages then may or may not be sold to other investors though the secondary mortgage market)

32

Prime rate

The rate the banks charges their best customers with the highest credit rating on unsecured short-term loans

33

Purchase money market

A mortgage given by the buyer to seller as part of the consideration in buying real property

34

Regulation Z

A federal law known as regulation Z that regulates loans by the professional lenders to private individuals

35

Reverse Annuity( RAM )

mortgage structured to reverse the standard payment to allow the bank to pay the Borrower a fixed amount each month. Design primally for the elderly.

36

Right of rescission

The right of a borrower to cancel a financing agreement within three days after receiving a disclosure statement from a lender

37

Secondary mortgage market

The market that purchases existing mortgages that were originally established in the primary mortgage market. Some government involvement in this market includes the Federal National Mortgage Association FNMA the Government national mortgage Association GNMA and the federal home loan mortgage Corporation FHLMC.

38

Shared equity

A mortgage where the borrower and the lender agreed to share in the increase in value of the property securing a loan

39

Truth in lending

A federal law known as regulation Z that regulates loans by professional lenders to private individuals

40

Usury

Charging and unlawfully high rate of interest

41

VA mortgage

A mortgage loan loan to an eligible veteran that is guaranteed by the Veterans Administration VA

42

Variable rate mortgage

A mortgage where the interest rate changes over time based on some agreed upon index. Also known as adjustable-rate mortgage ARM

43

Wrap around mortgage

Financing where a new mortgage is placed in a junior position to an existing mortgage the new mortgage includes the existing first mortgage which is not paid off plus any new funds loaned