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Financing Fundamentals > Loan Repayment Plans/Loan Types and Clauses > Flashcards

Loan Repayment Plans/Loan Types and Clauses Flashcards

1
Q

The type of interest usually charged on home loans is:

a. annuity
b. accrued
c. compound
d. simple

A

D. Simple Interest

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2
Q

Interest on real estate loans is normally paid:

a. in arrears
b. in advance
c. on estimated principal
d. annually

A

A. In arrears

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3
Q

If a mortgage loan payment is paid PITI, which portion goes into an escrow (impound) account?

a. interest & taxes
b. taxes & insurance
c. insurance & principal
d. principal & interest

A

D. Principal and Interest

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4
Q

A type of loan in which each payment applies to principal and interest is:

a. amortized
b. package
c. balloon
d. open-ended

A

A.

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5
Q

A loan that is amortized over 30 yrs but calls for the balance to become due at the end of the seventh year is called:

a. balloon
b. blanket
c. purchase money
d. reverse annuity loan

A

A. Balloon loan

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6
Q

The difference between the value and the mortgage balance is called:

a. profit
b. equity
c. loan-to-value ration
d. net value

A

B. equity

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7
Q

A developer needs a loan to cover the purchase of four lots to build homes. The lender would use a ? loan

a. package
b. blanket
c. wraparound
d. super

A

B. Blanket loan

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8
Q

Loan that includes both real and personal property as collateral is a ? loan

a. package
b. purchase money
c. blanket
d. budget

A

A. Package loan

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9
Q

In a construction loan, the funds are released to the borrower:

a. before construction
b. after construction is completed
c. in installments as construction proceeds
d. interest only w/ principal paid at the end

A

C. installments as construction proceeds

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10
Q

Financing Instruments

Financing Instruments:

Promissory Note (Borrower’s IOU)

  • Evidence of the Debt
  • Terms include:

**Borrower & Lender**Amount of Debt**Interest Rate**Payment

  • Does not describe collateral
  • usually not recorded

Security Agreement (Mortgage or Deed of Trust) - The security agreement/security instrument explains what is going to happen if buyers don’t repay the loan as promised (foreclosure process)

  • Hypothecates property as collateral
  • Includes foreclosure provisions
  • Includes property legal description
  • Recorded to establish lien priority
A
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11
Q

The type of interest usually charged on home loans is

a. annuity interest
b. accrued interest
c. compound interest
d. simple interest

A

D. simple

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12
Q

Interest on RE loans is normally paid

a. in arrears
b. in advance
c. on estimated principal
d. annually

A

A.

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13
Q

If a mortgage loan pmt is paid PITI, which portion goes into an escrow account

a. interest and taxes
b. taxes and insurance
c. insurance and principal
d. principal and interest

A

D.

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14
Q

A type of loan in which each payment applies to principal and interest is

a. amortized
b. package
c. balloon
d. open ended

A

A.

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15
Q

A loan that is amortized over 30 yrs but calls for the balance to become due at the end of the 7th yr is called a

a. balloon loan
b. blanket loan
c. purchase money loan
d. reverse annuity loan

A

A.

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16
Q

The difference between the value and the mortgage balance is called

a. profit
b. equity
c. loan to value ration
d. net value

A

B.

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17
Q

A developer needs a loan to cover the purchase of four lots to build homes. The lender would use a

a. package loan
b. blanket loan
c. wraparound loan
d. super loan

A

B.

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18
Q

A loan that included both real and personal property as collateral is a

a. package loan
b. purchase money loan
c. blanket loan
d. budget loan

A

A. package

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19
Q

The interest rate and monthly payment are subject to periodic changes in a

a. adjustable rate mortgage
b. construction loan
c. package mortgage
d. wraparound mortgage

A

A.

20
Q

In a construction loan, the funds are released to the borrower

a. all before construction
b. all after construction is completed
c. in installments as construction proceeds
d. interest only w/ principal paid at the end

A

C.

21
Q

A seller who wants to help a buyer who has an insufficient down payment might suggest a

a. budget mortgage
b. open end mortgage
c. package mortgage
d. purchase money mortgage

A

D.

22
Q

R sells a property to S for $100,000 with a $30,000 down payment and carries back the balance as a $70,000 note and trust deed. R remains liable for an existing $35,000 first loan. This type of financing is known as

a. wraparound loan
b. blanket loan
c. package loan
d. saving loan

A

A.

23
Q

The lender makes monthly payments to the borrower in a

a. growing equity mortgage
b. shared appreciation mortgage
c. reverse annuity mortgage
d. balloon mortgage

A

C.

24
Q

If a real estate company wants to borrow money but doesn’t want the company or the broker to be liable in the even of default, they should execute a

a. personal note
b. recourse note
c. nonrecourse note
d. unsecured note

A

C.

25
Q

An increase of 1% in interest rate is equivalent to an increase of how many basis points

a. 1
b. 10
c. 100
d. 1000

A

C.

26
Q

The act of extinguishing a debt by regular payments is known as

a. depreciation
b. amortization
c. prepayments
d. acceleration

A

D.

27
Q

A property with an existing loan is sold, the buyer takes ownership, but the lender’s permission was not obtained. The lender

a. has no recourse against the seller or buyer
b. can increase the interest rate
c. may call the loan due on sale
d. may exercise the defeasance clause

A

C.

28
Q

A clause that permits the lender to call the entire loan balance due and payable under certain conditions like default is

a. acceleration
b. acquisition
c. alienation
d. defeasance

A

A.

29
Q

A release clause is normally found in a

a. installment loan
b. blanket loan
c. budget loan
d. participation loan

A

B.

30
Q

The clause in a first mortgage that permits a second mortgage to take priority is called a

a. subordination clause
b. subrogation clause
c. substitution clause
d. release clause

A

A.

31
Q

A loan provision that indicates which persons are held personally liable if default occurs is

a. carve out clause
b. cross collateralization clause
c. nonrecourse clause
d. non disturbance clause

A

A.

32
Q

The provision in a mortgage in which the lender agrees not to evict a tenant if a property is acquired through foreclosure is a

a. non disturbance clause
b. personal guarantee “
c. subordination clause
d. defeasance clause

A

A.

33
Q

A loan clause that lenders use to maintain a certain yield on the loan is a

a. partial release clause
b. personal guarantee “
c. non disturbance “
d. prepayment clause

A

D.

34
Q

A clause in a mortgage that states that the lender no longer has an interest in the property is called a

a. alienation clause
b. satisfaction “
c. defeasance “
d. release “

A

D.

35
Q

A clause that allows the lender to declare the loan all due and payable if the property is sold is a

a. release clause
b. defeasance clause
c. alienation clause
d. prepayment clause

A

C. alienation clause AKA Due on sale clause

36
Q

A clause that allows a lender to make an extra charge if the loan is paid off early is a

a. due on sale clause
b. defeasance clause
c. release clause
d. prepayment clause

A

D.

37
Q

A clause in a mortgage that states the mortgage is null and void when the note is paid off is a

a. release clause
b. acceleration clause
c. defeasance clause
d. carve out clause

A

C.

38
Q

A clause calling for individual parcels to be discharged from a blanket loan is a

a. release clause
b. alienation clause
c. acceleration “
d. personal guarantee “

A

A.

39
Q

A clause in which the borrower agrees to be held personally liable for the debt is a

a. release clause
b. carve out clause
c. prepayment “
d. defeasance “

A

B. aka personal guarantee clause

40
Q

List the remaining loan repayment plans:
1. Amortized
2. ?
3. Straight Loan
4. Negative Amortization
5. ?

A

Budget Loan (PITI)
Balloon Payment

41
Q

A loan in which the monthly payment of principal and interest is level and constant is a(n):

A

Amortized or Fully Amortized

42
Q

The amount of money that is borrowed is the:

A

Principal

43
Q

Interest on real estate loans is usually ______ interest.

A

simple interest

44
Q

When one payment on a loan (usually at the end of the loan term) is larger than the regular monthly payment, it is known as a:

A

Balloon Payment

45
Q

A loan in which the payment includes principal, interest, taxes and insurance is known as a(n):

A

Budget loan (PITI loan)

46
Q
A

Financing Fundamentals (4 decks)

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