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59 Cards in this Set

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smaller-than-normal payments are required in the early years, but gradually increase to larger-than-normal payments in later years
Graduated-payment mortgage
a base interest rate is set for the loan that is perhaps 0.5 percentage point higher than the interest rate for a conventional mortgage
Lender buy-down mortgage
series of short-term loans for two-to five-year periods, but with total amortization spread over the usual 25 to 30 years
Rollover Mortgage
lender offers an interest rate about one-third less than the market rate
shared-appreciation mortgage
People who design their loan in advance to reduce interest costs by paying off the mortgage loan early
Growing-equity mortgage
the buyer pays the seller a downpayment generally equal to the seller's equity in the home and takes responsibility for the mortgage loan payments for the remaining term of the seller's existing mortgage loan
assumable mortgage
this reuqires that the mortgage loan be fully paid off if the home is sold
due-on-sale clause
dividing the maximum amount the lender will loan on a piece of property by the property's purchase price
loan-to-value ratio
compares the total annual expenditures for housing with the loan applicant's gross annual income
front-end ratio
compares the total of all monthly debt payments with gross monthly income
back-end ratio
A lease is the cost of using an apartment or other housing space.
False
Owners of a condominium pay a homeowner's fee covering expenses related to the management of common grounds and facilities.
True
As a rule of thumb for determining the affordability of housing, the front-end ratio compares total monthly debt repayments (for the mortgage, auto loans, and other debts) with gross monthly income.
False
A mortgage loan is a loan to purchase real estate, in which the real estate itself serves as collateral.
True
Dividing the maximum amount a lender will loan on a piece of property by its value results in its loan-to-value ratio.
True
When a home has a second mortgage, it is the original mortgage that gets paid first in the event of default.
True
A land contract (or contract for deed) is an example of seller financing.
True
Negative amortization is the process of reducing the amount owed on a mortgage loan.
False
a special reserve account at a financial institution where funds are held until they are paid to a third party
escrow account
monthly payments are smaller than necessary to pay the interest
negative amortization
Reverse mortgages are also referred to as home-equity conversion loans.
True
Both home-equity installment loans and home-equity lines of credit are available to those who want to borrow the home equity as collateral.
True
In calculations of real estate property taxes, a home's fair market value and its assessed value are the same.
False
Prospective home buyers can qualify for a lower down payment if they make use of private or governmental mortgage insurance.
True
The factor(s) that make(s) home ownership financially advantageous over renting is (are)
Taxes and appreciation
The concept of gradually paying off a mortgage loan through a series of periodic payments is called
amortization
The formal legal document that outlines the actual agreement that results from real estate negotiations is called a(n)
Purchase Contract
The traditional fixed-rate, fixed-term, fixed-payment mortgage loan is called a
Conventional Mortgage
real estate taxes and homeowners' insurance premiums are often included in a monthly mortgage payment?
True
You can pay off your mortgage loan early and thereby save on total interest costs by using a(n)
Growing-Equity Mortgage
The two types of loans available when using the equity in your home as collateral are referred to as home-equity lines of credit and
Home-equity installment loans
Which of the following increase the return for a mortgage lender?
Interest Points
When you make an offer on a house, you should give a deposit called __________ _______ to the seller to ensure that the seller will not sell the house to someone else while you are negotiating.
Earnest Money
A(n) __________ is the written history of the ownership of real estate.
Abstract
Which of the following is used to convey real estate ownership to another?
Deed
The typical commission rate charged by brokers to list the home for sale and other services is
6 percent paid by the seller.
People who buy cooperative housing actually own a share in the ownership of the cooperative that is equivalent to the value of their particular housing unit and a proportionate share of all common areas.
True
A sales contract for the offer to purchase a home is usually backed by earnest money.
True
From the home buyer's perspective there is no meaningful difference between a listing agent and a selling agent.
True
The loan-to-value ratio for determining a down payment on a mortgage loan is calculated by dividing the maximum amount the lender will loan on a piece of property by its value.
True
The traditional fixed-interest rate, fixed-term, fixed-payment mortgage is referred to as a conventional mortgage.
True
The down payment required to assume a mortgage is roughly equivalent to the seller's equity in the home.
True
Interest-rate caps on an adjustable-rate mortgage place limits on both annual and life-of-loan increases in the mortgage interest rate.
True
Home-equity lines of credit are a form of second mortgage.
True
An escrow account is often used to hold real estate property tax payments and homeowners' insurance payments until the bills are received and paid by the lender.
True
A point is equal to 1 percent of the purchase price of a home.
False
The document outlining the legal right of ownership interest in real estate is called a title.
True
Homes are covered by implied warranties, but buyers may still want to purchase warranty insurance
True
Which of the following types of leases allows for either party to terminate the agreement at any time if they give proper notice (e.g. one week or one month)?
Periodic Tenancy
Which of the following types of owned housing is fully- or partially factory-assembled and designed to be transported in portions to the home site?
Manufactured Housing
A purchase offer on a home is usually accompanied by
Earnest Money
In order to protect themselves from the possibility of being turned down for a mortgage, home buyers should make sure that which of the following is included in the purchase contract?
contingency clause
The dollar value of a home in excess of what is owed on it is the
Equity
Which of the following occurs when the monthly payment on a mortgage loan is not sufficient to pay the interest owed?
Negative amortization
Which of the following types of mortgages allows the owner of a paid for home to live in the home and yet receive periodic payments from borrowing on the equity in the home?
Reverse Mortgage
Real estate property taxes are based on which of the following dollar amounts?
assessed value of the property
Which of the following is a legal opinion (not a guarantee) written by an attorney of the status of ownership of real estate?
Certificate of title
Of the four types of deeds, which is the safest?
Warrenty deed
Which of the following lists all of the fees to be paid at a real estate closing?
Uniform Settlement Statement