Real Estate
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| Voluntary lien | lien placed with owner's consent, like mortgage or trust deed
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| Involuntary lien | lien placed without consent of owner, like judgment
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| Judgment | court's final decision of rights or obligations of involved parties - once filed creates general lien
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| Mechanics Lien | lien placed on property based on work or furnished materials; filed for nonpayment of labor; takes priority over mortgage
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| Statutory Lien | placed on property by law, like real estate property taxes or special assessments (pay for public improvements like sidewalks)
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| Equitable lien | placed on property by written contract
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| Lis pendens | "suit pending"; pending lawsuit, litigation has been recorded; foreclosure wipes this out
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| Deficiency judgment | legal judgment given when deed is not enough to cover debt
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| Junior lien | lien below or after senior lien (senior lien is paid first)
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| General lien | lien on all property - real and personal
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| Specific lien | lien directly tied to property
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| Trust | arrangement where legal title is transferred from trustor to trustee
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| Progression | value of less expensive properties will increase when placed in area of more expensive properties
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| 4 elements of value | scarcity, transferability, utility, demand (STUD)
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| Capitalization (cap) rate | ratio between net operating income and its capital cost (original purchase price); rate of annual return
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| Tenancy by the entirety | joint tenancy only for married couples, created by will or deed; cannot sell interest; in case of divorce becomes tenants in common (& right of survivorship disappears); free from dead spouse's creditors
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| Gross Rent Multiplier (GRM) | purchase price of RE investment / annual rental income before expenses (taxes, insurance, utilities)
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| Economic Obsolescence | social or external deterioration (abandoned gas station next door, etc. - outside control)
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| Functional Obsolescence | functional problems or poor design (within control)
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| Financing | pledge of property to lender as security for payment of debt (mortgagor = borrower)
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| Lien | legal interest that creditor has in person's property
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| Lien theory | state gives lender lien interest in property
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| Title theory | lender holds title to property (lender owns property until debt is repaid)
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| Trust deed | security document used in most title theory states (trustor (borrower) signs deed of trust and gives legal title to trustee (title company/attorney), who holds title for beneficiary (lender) - borrower retains equitable title
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| Equitable title | right to possession with right to acquire legal title once a condition has been met
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| Reconveyance deed | once borrower (trustor) has made all payments to lender, trustee (title co/attorney) issues reconveyance deed to trustor; used in conjunction with trust deed to clear title of any liens pertaining to Note & trust deed
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| Discount point | = 1% of loan amount
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| Origination fee | fee paid to lender for processing loan application
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| Conventional loan | not part of gov't housing program; usually putting less than 20% down; may require PMI
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| Private mortgage insurance (PMI) | insures lender in case of default
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| Amortization | gradual reduction of loan debt thru periodic installment payments (full amortized = paid off at end of loan term; partially amortized = not fully paid off)
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| Promissory note | written contract between borrower and lender, providing evidence of indebtedness
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| Fannie Mae (Fed. National Mortgage Assoc.) | fed sponsored private corp. provides secondary market for housing mortgages
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| Ginnie Mae (Gov't National Mortgage Assoc.) | gov't part of secondary market deals in recycling VA and FHA mortgages, especially ones highly leveraged
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| Mortgage Broker | real estate financing professionals acting as intermediary between consumers and lenders during mortgage transactions; usually originates loans while lender funds them
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| Mortgage banker | direct mortgage lender; no middlemen (= broker and lender in one)
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| Buy down | obtaining a lower interest rate by paying additional points to the lender; results in lower payments which are easier to qualify for
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| Equity | interest or value remaining after payments of all liens on property (money left over after you pay off debt (if house sells for $300k and you owe $200k = $100k equity))
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| Home equity line of credit (HELOC) | usually has set limit, can be used like credit card; payments are usually interest only and principal amount is due at the end
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| Adjustable rate mortgage (ARM) | mortgage with interest rate that changes over time in line with movements in the index; usually contains rate cap, which limits adjustments that can change over life of loan
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| Payment cap | Maximum adjustment amount for payment
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| Adjustment period | how often rate cap can be changed
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| Blanket mortgage | covers more than one parcel in a lot; may be negotiated by a developer
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| Release clause | provision found in blanket mortgage enabling mortgagor to obtain partial releases of specific parcels from the mortgage upon payment
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| Growing equity mortgage | rapid payoff mortgage; monthly payments increase which applies directly to principal, reduces loan term
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| Graduated payment mortgage | flexible payment plan; payments start low and increase each year for specific amount of years then level off for remaining term
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| Negative amortization | increase in outstanding amount b/c monthly payment does not cover monthly interest due; debt increases as payments are made
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| Open mortgage | borrower can pay off loan before end of term
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| Open end mortgage | allows borrower to secure more funds under original loan w/out redoing paperwork; like a credit card; construction loan is example
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| Construction loan | open end loan, receive money in series of draws, short term/interim loan; only for period of construction
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| Package mortgage | real and personal property; to cover purchase of property and furnishings
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| Shared appreciation loan | lender originates loan at a below market rate in return for share of appreciation once property is sold
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| Purchase money mortgage | extension of credit by seller to buyer (but can refer to any type of financing for purchase of real estate)
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| Participation loan | A) loan requiring interest + portion of profits as payment
B) loan made/owned by more than one lender
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| Reverse mortgage | loan for ages 62+; no income qualifications; no monthly payments; loan is repaid when borrower no longer lives at property; if no existing loan, owner can receive monthly payment guaranteed for rest of life while they live in the house; sum or credit line
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| Straight note | mortgage where borrower pays interest due on principal during specified term; principal must be paid at end of term
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| Wraparound loan | refinancing method, new mortgage placed in secondary/subordinate position; new mortgage includes unpaid principal of 1st + additional sums; doesn't disturb 1st mortgage
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| Sale lease back | Simultaneous selling and leasing back of property
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| Acceleration clause | entire debt is due immediately in case of default under contract terms
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| Alienation clause | lender has option to require that balance of loan is immediately due and payable if property is sold or transferred; also called "due-on-sales" clause
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| Prepayment clause | allows borrower to pay debt before due-date
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| Prepayment penalty | charge imposed when borrower pays off loan early; cannot due so without paying fee - based on percentage of loan balance
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| Lock-in clause | borrower cannot repay loan prior to specified date
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| Subordination clause | rights of holder are secondary to future lien
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| Pyramiding | borrowing against one property to invest in another
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| Arbitrage | borrow money at one interest rate and lend at a higher interest rate
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| Syndication | pooling money for investment purposes
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| Security | joining with others for investments; profit is made from efforts of others; ex: stocks and bonds
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| General partnership | all partners must participate in management and are liable
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| Limited partnership | one general partner and other silent partners (only liable to their degree of investment)
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| Joint venture | joining of 2+ ppl in business transaction
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| Bundle of rights | right to: possession, control, enjoyment, exclusion, disposition
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| License | personal privilege to use land of another; can be revoked
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| Inverse condemnation | gov't fails to pay just compensation, owner then sues gov't
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| Escheat | property reverts to state ownership when person dies intestate and w/out heirs
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| Emblements | annual crops
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| Freehold estate | ownership is for undefined length of time
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| Fee simple defeasible/determinable | grantor places condition on fee simple estate in the deed
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| Life estate | interest in real property held for duration of life of designated person
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| Leasehold estate/Less than freehold estate | estate held by one who rents or leases
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| Reversionary right | owner has right to regain possession of property after lease has expired
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| Assignment | transfer of contract rights
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| Estate for years | leasehold interest in land for fixed period of time; tenancy for years (defined end point)
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| Periodic tenancy | estate from years to years- no fixed end point
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| Estate at will | can be ended at any time
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| Estate in sufferance | tenant wrongfully holds over; tenancy at sufferance
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| Gross lease | standard - rental agreement for use of property where tenant pays fixed amount
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| Net lease | tenant pays monthly fee + taxes, insurance and maintenance
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| Percentage lease | rental based on percentage of monthly or annual gross sales made on premises
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| Lease option | option to purchase property during term or at end of lease; owner is then optionor and tenant is optionee
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| Liquidated damage clause | determines in advance the measure of damages if a party breaches agreement (e.g., EMD)
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| General warranty deed | greatest protection, includes: seisin (right to convey title), against encombrances, quiet enjoyment, further assurance, warranty forever
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| Special warranty deed | grantor received title and property was not encumbered while grantor held title
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| Bargain and sale deed | grantor holds title and possession of property & no express warranties against encumbrances
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| Quitclaim deed | least protection; no covenants or warranties; conveys whatever interest the grantor had when deed is delivered
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| Homeowners' insurance policy | standardized package that covers fire, theft, public liability, and other common risks
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| Standard Title Coverage | Insures against: hidden defects (forged docs), conveyances by incompetent, incorrect marital statements, improperly delivered deeds
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| Extended Title Coverage | American Land Title Association (ALTA) includes: defects discovered by inspection, rights of parties in possession, examination of survey, unrecorded liens
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| Front Foot | linear foot (width)
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| Torrens Title System | Person acquires title only once registered; relies on physical title doc; owner submits written app to register title, app submitted to court clerk of county where RE located; once prove ownership, court enters order to register RE; issued cert of title
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| Valid Deed Needs | grantor: legal competency, grantee name, consideration, granting clause, habendum clause, accurate legal des, exceptions, notarized signature of grantor, delivery of deed & acceptance by grantee
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