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Financing
Term | Definition |
---|---|
Mortgage | An instrument used to secure a note, creating a lein on property used as collateral. |
Mortgagor | Borrower |
Mortgagee | Lender |
Land Contract | Buyer pays a down payment to selller at closing both parties sign land contract. |
Deed of Trust | Title is transferred to a third party called a Trustee. |
Equity | Difference between price and loan amount. |
Formal Assumption | Promissory note and mortgage contract is assumed by buyer for seller after receiving lenders approval. |
Assignment of Mortgage | Is the transfer of a persons right or interest in a mortgage contract to another person. |
Assignment of Mortgage Clause | Prohibits the assignment of mortgage from present mortgagor to another without approval of the mortgagee. |
Conventional Mortgage | Not insured or guaranteed by the government. |
Non-Insured Conventoinal Loan | Usually involves a loan to value ratio of 80% or less |
Insured Conventional Loan | Insurance obtained privately when loan to value ratio exceeds 80% . |
Unconventional Mortgage | Obtained with help of government insurance or guarantee. |
Chattel Mortgage | Used to create leins on personal property. Security Agreement. |
Open-Ended Mortgage | A credit limit is established based on the Fair market value of property. A home equity loan. |
Budget Mortgage | Monthly payments include prorated property taxes and insurance. |
Second Mortgage | Recorded against property in a secondary position to an earlier mortgage. |
Ballon Loan Mortgage | A short term loan. A partially amortized loan. |
Reverse Mortgage | Lender pays borrower a lump sum or periodic payment that does not have to be paid back. |
Nonamortized Loan | Paid back in one lump sum after a relatively short period of time. |
Buy down Mortgage | Points are paid to lender in exchange for receiving lower loan interest rate. |