Section 5 - Chapter 16 Flashcards Preview

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Flashcards in Section 5 - Chapter 16 Deck (31):
1

federal reserve system:

maintain sound credit conditions, help counteract inflation/deflation, create favorable economic climate

2

reserve requirments:

go up and down to increase/decrease money in supply and interest rates

3

discount rate

% charged by fed to member banks

4

primary mortgage market:

those lenders that originate loans: thrifts, savings associations, commercial banks, insurance companies, credit unions, pension funds, etc.

5

secondary mortgage market:

where loans are bought and sold after they're funded

6

fannie mae:

provides secondary market for mortgage loans; conventional, fha, and va loans

7

ginnie mae

special assistance programs, guarantees mortgages backed using fha and va loans

8

freddie mac

secondary market primarily for conventional loans

9

straight loan is an:

interest only loan

10

amortized loan is:

a loan that pays principal and interest together in installments

11

adjustable rate mortgages

interest rate fluctuates

12

balloon payment

lots of principal still owed at end of term

13

growing equity mortgage

fixed interest, but principal paid increases on a schedule

14

reverse mortgage

borrow money against equity in the home

15

nonrecourse loan:

borrower not held personally liable for the loan

16

LTV, loan to value ratio

ratio of debt to value of property where value is sale price or apraisal value, whichever is less (high down payment, small loan = low LTV) - loan divided by value = LTV %

17

conventional loan

most secure because LTV is often low, typically 20% down payment for LTV of 80% or lower

18

PMI - private mortgage insurance

with low down payment, borrower purchase insurance to provide lender with funds in case of default - typically protects top 20-30% of loan

19

federal housing administration does:

not lend money or build homes; they insure loans when provided by approved lenders

20

va-guaranteed loans

va loans for qualifiying veterans

21

purchase-money mortgages

basically seller financing where borrower pays seller directly

22

package loans:

includes real and personal property

23

blanket loans:

covers more than one parcel or lot

24

wraparound loans

enables borrower with an existing mortgage to get additional financing from second lender without paying off first mortgage

25

open-end loans

like a home-improvement loan

26

construction loan

made to finance construction of improvements on real estate

27

sale-leaseback:

seller sells then leases back the property

28

buydown:

a way to temporarily or permanently lower interest rate, usually by putting a large amount down

29

home equity loans:

source of funds using equity built up in a home

30

regulation Z and truth in lending act:

lending institutions must inform borrowers of true cost of obtaining credit

31

equal credit opportunity act

prohibits lenders from discriminating