Mortgages Defined

Question 1

Mortgage Loan

Answer 1

Loan used by borrowers to either purchase a residual property using a purchase money mortgage or to refinance or replace that mortgage

Question 2

Rate and Term Refinance

Answer 2

Allows them to lower the interest rate or change the duration of the loan (or both) IOT lower monthly payments

Question 3

Cash out Refinance

Answer 3

Allows borrower to increase his loan amount by accessing or tapping into the equity in his property to use that cash for a number of reasons

Question 4

Amortize

Answer 4

Loan pays itself off including the amount borrowed and the interest charge by the end of the loan term

Question 5

PITI

Answer 5

Principal, interest, taxes, and insurance: most mortgages today also require that a borrower remit a portion of their annual property taxes and homeowners insurance (T&I)

Question 6

Loan to Value (LTV)

Answer 6

If a home is valued at $100,000 and the mortgage loan is for $75,000 the LTV is %75. The remaining $25,000 is the borrowers equity and not subject to a mortgage lien.

Question 7

Three (3) documents involved in taking out a mortgage loan

Answer 7

1. Deed: borrowers title (ownership) of property
2. The Promissory Note: promise to pay over a specified time at specified rate of interest.
3. Mortgage/Deed of Trust: creates a security interest and evidences a lien or encumbrance on the property.

Question 8

Lien

Answer 8

legal claim of a lender against the property of a borrower to guarantee the repayment of debt

Question 9

Deficiency Judgement

Answer 9

If funds recouped from a sale of a foreclosed home are insufficient to cover the debt, the borrower is still responsible for repayment.