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11 Cards in this Set
- Front
- Back
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Owners and lenders have conflicting demands: what are they? |
Owners invest in real estate for shelter in income, and lenders invest in mortgages based on the real estate value and security |
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What are an owners objectives compared to a lenders? |
Owners: long-term capital growth in an annual return on their equity in the property that they own
Lenders: seeking interest income portfolio yield, payable either directly from the property rental income or the value of the owners use of the property, called implicit rent |
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Implicit rent |
The value of the owners use of the property |
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Federal reserve (The Fed) |
The central bank in control of regulating the US financial and monetary system. It plays an integral role in the overall economic and financial health of the nation. It is designed to keep the economy stable and does so by maintaining sufficient dollars in circulation is our nations medium of exchange |
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Purchasing Power |
Refers to the homebuyers ability to purchase property funded by mortgage money based on 31% of their gross income for mortgage payments and current interest rates |
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DTI Ratio |
The debt to income ratio has to do with how much you owe versus how much you make and determines your credit score |
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Seller financing |
Seller financing is also known as installment sale, credit sale, or carry back financing, and it happens in the cellar carry back a note and trust deed executed by the buyers evidence to a debt owed for a purchase of the sellers property. The amount of debt is a remainder of the price due to the seller after deducting the down payment and any existing mortgage used by the buyer to pay part of the price |
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Senior mortgage |
AKA. Senior lien or first mortgage, is the first loan against the property and has priority |
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Junior mortgage |
AKA junior lien or second mortgage is the second or subsequent loan on a property in a lesser subordinate position. For example, a home equity line of credit is generally in a second position |
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Portfolio yield/mortgage yield |
Any earnings from fees or interest on a mortgage realized by a mortgage holder, such as a lender carry back seller |
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Impound account/escrow account |
A money reserve a property owners funds received held by a mortgage holder to pay the owners anymore obligations owed for property taxes, hazard insurance premiums, assessment liens and improvement bonds |
