Mortgage features Flashcards
(8 cards)
What is a down payment?
The amount of cash the buyer will pay for the purchase
A down payment is typically a percentage of the purchase price.
What is equity?
Equity is the difference between the value of the property and the mortgage debt
Equity increases as the mortgage balance decreases or as the property value increases.
What is interest?
Interest is the cost of using borrowed funds
Interest is typically expressed as a percentage of the loan amount.
What is loan servicing?
Loan servicing is when a lender handles the payment collection and recordkeeping for a loan sold to an investor
- It includes managing the loan until it is fully paid off.
- (So, a company manages a loan until it is fully paid off)
- (it’s like property management for an investor, but for a loan)
What is an escrow (impound) account, in the context of a loan?
A monthly payment the lender collects to pay property taxes & hazard insurance
This account helps ensure that these payments are made on time.
What does PITI consist of?
Monthly principal, interest, (property) taxes, and insurance payment
PITI is often used to determine the total monthly mortgage payment.
What are discount points?
Prepaid interest charged by the lender to increase the real yield
Each point typically costs 1% of the loan amount.
What is the loan origination fee?
A charge by the lender to make the loan
This fee is usually a percentage of the loan amount.
