Texas Real Estate

Card Set Information

Texas Real Estate
2013-12-12 12:35:15
04 Finance

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  1. Mortgage
    A pledge of real property as security for a debt
  2. Deed of Trust
    A three party loan instrument - borrower, lender and trustee
  3. Note, Promissory Note
    A personal promise to repay a debt
  4. Mortgagor
    Borrower under a mortgage
  5. Mortgagee
    Lender under a mortgage
  6. Beneficiary
    Lender under a deed of trust
  7. Trustor
    Borrower under a deed of trust
  8. Trustee
    A third party under a deed of trust who acts as an agent for the lender
  9. Power of Sale
    A clause in a deed of trust allowing non-judicial foreclosure
  10. Non-judicial Foreclosure
    Foreclosure that does not require court proceedings or a judgment of foreclosure - the result of the power of sale clause in a deed of trust
  11. Hypothecation
    The action of pledging real property as security for a debt
  12. Acceleration Clause
    A clause in a mortgage allowing the lender to declare the whole amount of the principal due and payable in the event of default by the borrower
  13. Alienation Clause
    "Due on sale" clause stating that the balance of the debt becomes due if the property is sold by the mortgagor
  14. Defeasance Clause
    A clause stating that the lien on the property is defeated when the debt is repaid
  15. Escalation Clause
    A clause allowing the lender to raise the existing interest rate - although most often associated with an Adjustable Rate Mortgage, it can be used to overcome an alienation clause
  16. Prepayment Clause
    A clause stating that the borrower can pay the entire amount or the stated amount prior to the due date in the note and whether there will be a penalty associated with that prepayment
  17. Subordination Clause
    A clause allowing a lender to move to or take a lower lien position
  18. Assumption Clause
    A clause outlining the obligations of the original borrower and a new borrower in the event the loan is assumed
  19. Straight Assumption
    A new borrower assumes the payments and liability on an existing loan and usually releasing the original borrower from liability
  20. Assumption "subject to"
    A new borrower assumes the payments but not the liability on an existing loan - the original borrower remains liable
  21. FHA
    Federal Housing Administration - aids in home financing by insuring high LTV loans with more lenient qualifying ratios
  22. MIP
    Mortgage insurance premium - insurance on the FHA loan - insures the whole loan
  23. VA
    Veteran's Administration - assists veterans in the purchase of housing by guaranteeing loans
  24. DD 214
    Veteran's discharge papers - provided to demonstrate eligibility for a VA loan
  25. Certificate of Eligibility
    Evidence of VA approval of a qualified veteran for a VA loan
  26. CRV
    VA appraisal - Certificate of Reasonable Value
  27. Funding Fee
    A fee required to be paid by the buyer, seller or included in the loan at closing on all VA loans
  28. Amortization
    The repayment or satisfaction of a debt by installment payments of principal and interest on a regular basis
  29. Conventional Loan
    A loan that is neither federally insured nor guaranteed - a private sector loan
  30. Fixed Rate Amortized Loan
    A loan with equal regular payments of principal and interest until the debt is fully repaid or amortized
  31. Bi-weekly Loan
    A fixed rate amortized loan in which one-half of a monthly payment is made every two weeks resulting in much quicker growth of equity and significant interest savings
  32. Term Loan
    A loan with payments of interest only until the end of the term, when the entire principal is repaid in one lump sum - a zero amortization loan - a straight loan
  33. Straight Loan
    A loan with payments of interest only until the end of the term, when the entire principal is repaid in one lump sum - a zero amortization loan - a term loan
  34. Blanket Loan
    Several pieces of property secured by a single loan (several lots on one note)
  35. Release Clause
    A clause often found in a blanket loan allowing the borrower to obtain partial releases of specific lots by making required lump sum payments
  36. Package Loan
    A loan secured by real property plus personal property
  37. Budget Loan
    A loan where the monthly payment includes not only principal and interest but taxes and insurance - called the PITI payment
  38. PITI
    Principal, Interest, Tax, Insurance - a common payment for amortized loans
  39. Balloon Loan
    A partial amortization loan - equal regular payments of principal and interest, but long before the debt is amortized a final payment, substantially larger that the others is required to pay off the debt - the balloon payment
  40. Participation Loan
    Two or more lenders own a share - to lessen the lenders' risk; or one lender who collects principal and interest plus a percent of the profits on the investment property
  41. Shared Appreciation Loan
    A loan with an investor/lender who collects principal and interest payments and then a percent of the profits when the property is sold
  42. Open-End Loan
    A home equity line of credit - similar to a credit card but secured by real property
  43. Adjustible Rate Mortgage - ARM
    A loan with an interest rate tied to a readily available index - the rate will be adjusted periodically causing payment changes
  44. Margin
    On an adjustable rate mortgage the percent added to the index
  45. Construction Loan
    Short term financing with funds advanced periodically during the stages of construction - a term loan
  46. Wraparound Loan
    A new mortgage on a property is placed in a secondary lien position - it includes both the unpaid balance of the first mortgage plus additional amounts - the first mortgage is not paid off
  47. GPM - Graduated Payment Nortgage
    A loan whose payments start low and rise every year, usually for five years, after which they level off for the remaining term of the loan - can result in negative amortization
  48. Negative Amortization
    An increase in debt due to payments less than the interest owed - can be associated with a graduated payment mortgage
  49. Reverse Annuity Mortgage
    A home equity loan available to homeowners over 62 years of age - the lender makes payments to the borrower based on the equity in their property - the loan comes due upon the sale of the property or the death of the owner
  50. Sub-Prime Loan
    A loan with risk based pricing for borrowers with a credit rating in the A minus to F range - the interest rate will be one to five percent higher than for a prime borrower
  51. Prime Market
    Where consumers go to borrow money - banks, mortgage companies, etc.
  52. Secondary Market
    Where lenders go to borrow money - Fannie Mae, Ginnie Mae, Freddie Mac
  53. Conforming Loan
    A standardized conventional loan written on uniform documents that meets the purchase requirements of Fannie Mae and Freddie Mac - both loan amount and borrower characteristics must meet the guidelines
  54. Non-Conforming Loan
    A loan unable to be sold to Fannie Mae or Freddie Mac - for example a sub-prime loan
  55. Truth in Lending
    TIL, REG Z, Regulation Z, or the Consumer Credit Protection Act - a law passed to help consumers understand the true cost of borrowing money
  56. APR
    Annual percentage rate - a number that tells a borrower the total cost of a loan - not just interest, the sum of all charges associated with loan
  57. Trigger Term
    An advertising term that tell a buyer financing is available without giving the cost of that financing - it triggers the need for additional information (monthly payment, interest rate, down payment, term, etc.)
  58. Equal Credit Opportunity Act
    ECOA - a law prohibiting discrimination by lenders on the basis of sex, marital status, race, religion, age, or participation in public assistance programs
  59. Fair Credit Reporting Act
    FCRA - a law allowing individuals to inspect their credit files, correct errors and attach explanatory statements
  60. Community Reinvestment Act
    A law requiring lenders to meet the needs of the community in which they are chartered to do business
  61. Redlining
    The refusal to lend in a particular geographic area - prohibited by the Community Reinvestment Act
  62. Mortgage Broker
    An individual who brings a borrower and lender together for a fee - an intermediary between the borrower and the lender
  63. Mortgage Banker
    A person or firm not otherwise in banking, who provides independent funds for mortgage financing as opposed to banks that rely on deposits of funds to originate loans
  64. Leverage
    Using borrowed funds for investment - low down payment
  65. Equity
    The market value of a property less the outstanding debt
  66. Seller's Equity
    Cash price minus loan balance
  67. Buyer's Equity
    The down payment amount at closing
  68. Usury
    Charging an interest rate higher than the legal limit
  69. Usury Laws
    Laws passed to protect consumers from excessive interest charges
  70. Predatory Lending
    An unscrupulous lender taking advantage of a consumer's lack of knowledge regarding lending practices
  71. Loan Processor
    An individual who coordinates the loan application process for the lender
  72. Qualifying Ratios, Debt Ratios
    The percent of monthly gross income that can be used to pay the PITI payment on a mortgage loan, and the percent of monthly gross that can be used to cover all debt including the PITI - 28% - 36% would be typical debt ratios
  73. PMI
    Private Mortgage Insurance - the private equivalent of FHA insurance - allowing for high LTV / low down payment conventional loans - PMI insures the lender's risk
  74. Discount Rate
    The rate banks pay when borrowing from the Federal Reserve
  75. Reserve Requirement
    The percent of deposits banks are required to keep in the bank - set by the Federal Reserve
  76. Point
    One percent of the loan
  77. Discount Point
    One percent of the loan that is prepaid interest, tax deductible and results in increased yield for the lender
  78. Origination Point
    One percent of the loan that is a loan processing fee
  79. Buy Down
    An upfront payment of points used to reduce the borrower's monthly payment - by paying points at closing a borrower may secure a lower rate on the loan
  80. Prime Rate
    The interest rate commercial banks charge their preferred customers
  81. Lien Theory State
    A state where the mortgage lender has a lien on the property and the borrower has title
  82. Title Theory State
    A state where the mortgage lender has title to the property until the debt is repaid
  83. Down Payment Assistance Programs
    Government and private programs whose stated purpose is to help buyers to become homeowners