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Financing

Mortgage Loans

QuestionAnswer
Acceleration Clause a clause within a mortgage, permitting the lender to accelerate the amount due upon default and declare the entire balance due.
Adjustable Rate Loan a loan with a fluctuating interest rate. there are a set number of maximum increases over the life of the loan with the fluctuating rate based on a national.
Amortization the gradual paying of a debt through the systematic payments of principal and interest over a predetermined period of time.
Assumable Loan a financing instrument whose terms are transferable to a party wishing to purchase the property holding the assumable loan.
Balloon Payment a lump-sum payment due at the end of a mortgage contract period.
Bridge Loan a residential financing arrangement in which the buyer of a new home borrows money and gives a second mortgage on the buyer's unsold home to fund the acquisition of a new home.
Certificate of Eligibility the document a veteran receives from the veteran administration that establishes the maximum guarantee to which the veteran is entitled.
Certificate of reasonable value prepared by an appraiser on va loans. it states the market value of a property.
Credit Score a statistical method of assessing the credit risk of a loan applicant.
Creditor as defined by regulation z, a party who arranges for or extends credit more than 25 times a year or more than 5 times a year if the transaction is secured by a dwelling.
Deed in Lieu of Foreclosure a borrower deeds the property to the lender in full or partial payment of the mortgage debt. the title to be transferred must be free of all encumbrances.
Defeasance Clause a clause within a mortgage that legally binds the lender to release the lien from the title once the mortgage has been satisfied.
Deficiency Judgment a lien placed on a mortgagors real and personal property when a foreclosure sale does not satisfy the mortgage debt.
Discount Points are a type of prepaid interest or fees mortgage borrowers can purchase that lowers the amount of interest they have to pay on subsequent payments.
Equitable Title the right to obtain absolute ownership to property when legal title is held in another's name.
Federal Housing Administration (FHA) a government agency that insures mortgage loans for financial institutions against loss in the event of foreclosure.
Finance Charge the total cost of consumer credit as a dollar amount.
Fixed-Rate Loan a loan with a rate that does not change over the life of the loan.
Foreclosure a legal process used when a borrower defaults on a debt. the court sells the encumbered property to satisfy a debt.
Government Financing loan programs that are either insured or guaranteed by the federal government.
Judicial Foreclosure a method of foreclosure where a mortgagee files suit to have the property sold by court order in an advertised public sale.
Land Contract/Installment Contract (Contract for Sale) a type of seller financing in which title does not transfer from seller to buyer until the mortgage has been paid in full. under a land contract the buyer gains equitable title and seller maintains legal title.
Lien Theory lien theory states view the buyer as the owner of the property even though the lender has not received payment full. the mortgage creates a lien on the real estate which is used as collateral for a loan.
Loan to value ratio the relationship between the loan amount and the selling price.
Mortgagee Lender
Mortgagor Borrower
Non-Conforming Loans Loans that do not conform to the strict guidelines of conventional loans.
Origination Fee the dollar amount charged by the lender to cover the time and expenses incurred to arrange a loan. the fee covers the lender's overhead for the processing of the loan throughout the loan term.
Prepayment Penalty a charge imposed against a borrower for paying their loan off early.
Primary Market the market where loans generally are originated and sold.
Private Mortgage Insurance an insurance policy written to insure a portion of a mortgage amount for a borrower.
Promissory Note an unconditional promise of one person to pay a certain sum of money to another at a future specified time.
Purchase Money Mortgage a form of seller financing where the seller acts as a lender in granting a loan to the buyer for a portion of the purchase price.
Real Estate Settlement and Procedures Act (RESPA) a law enforced by hud created to insure that borrowers in mortgage loan transactions have knowledge of all settlement costs.
Reverse Annuity Loan mortgage is a special type of loan that provides regular monthly payments to homeowners. Many individuals that have reached retirement age seek out this type of loan because of the many benefits that it provides.
Right of Redemption a time frame in which the borrower can pay the lender off in full, stop the foreclosure proceeding, and keep possession of the property.
Rural Housing Service a loan program under the department of agriculture designed to meet the needs of low-income and moderate-income rural residents to purchase, construct, repair or relocate a dwelling and related facilities.
Satisfaction of mortgage a certificate issued by the mortgage when a mortgage is paid in full which removes the lien from public records.
Secondary Market a market for the purchase and sale of existing mortgages.
Strict Foreclosure a method of foreclosure, where the seller sues the defaulted buyer for possession of the property. used only in wisconsin under land contracts.
Triggering Terms advertising phrases that may not be used unless all of the terms of the loan are disclosed in the advertisement
Truth in Lending Act a law enforced by the ftc requiring lenders to disclose to borrowers the true cost of obtaining credit.
Vendee the purchaser of realty (buyer) under a land contract.
Vendor the seller of realty under a land contract.
Veterans Administration a government-sponsored mortgage assistance program, where eligible veterans or unmarried spouses of veterans who died in service may obtain partially guaranteed loans for the purchase or construction of a home.
Created by: bunkiebaby