Real Estate Chp

Front 1

PITI

Back 1

Principal, interest, taxes,insurance. Where owners must pay real Estate taxes, buy property insurance, and repay with interest the mortgage loan.

Front 2

Promissory Note

Back 2

Financing instrument, is a borrowers personal promise to repay a debt according to agreed terms. A promissory Note executed by the borrower (payor) is a contract with the lender (payee)

Front 3

Note

Back 3

Is a negotiable instrument, similar to a check or bank draft. That can be transfer the rights to receive payments to a third party by :

*by signing the instrument over to a third party

*by delivering the instrument to a third party.

Front 4

Interest

Back 4

Is a charge for the use of money, expressed as a percentage of the remaining balance of the loan.

* payments made at the end of a period is known as payments in the arrears.

Front 5

Usury

Back 5

Charging interest in excess of the maximum rate allowed by law.

Front 6

Loan Origination Fee

Back 6

Or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan. Such as loan officers salary, paperwork, and other costs of doing business

Front 7

Discount Points

Back 7

Are used to increase the lenders yield (rate of return) on its investment. The number of points charged depends on

*the difference between the loans stated interest rate and the yield required by the lender

*how long the lender expects it will take the borrower to pay off the loan

Front 8

Straight Loan

Back 8

Essentially divides the loan into two amounts to be paid off separately. The borrower makes periodic payments of interest

Front 9

Amortized Loan

Back 9

Partially pays off both principal and interest. Most mortgage and deed of trust loans are amortized (kill off) loans

Hint 9

10 to 30 years

Front 10

Adjustable rate mortgage

Back 10

Begins at one rate of interest, then fluctuates up or down during the loan term, based on a specified economic indicator.

Hint 10

Because the interest rate may change the mortgagors loan payment may change.

Front 11

Growing Equity Mortgage

Back 11

Is also called a rapid pay off mortgage. It uses a fixed interest rate, but payments of principal are increased according to a schedule.

Front 12

Reverse Mortgage

Back 12

Allows a homeowner aged 62 or older to borrow money against the equity built up in the home.

Hint 12

With reverse mortgage the homeowner equity diminishes as the loan amount increases.

Front 13

Foreclosure

Back 13

Is a legal procedure in which property pledge as security for a debt is sold to satisfy the debt.

Front 14

Judicial Foreclosure

Back 14

Allows the property to be sold by court order after the mortgagee has given sufficient public notice. When a borrower defaults , the lender may ACCELERATE the due date of the remaining principal Balance, along with all overdue monthly payments.

Front 15

Non judicial Foreclosure

Back 15

Contains power of sale clause. No court action is required.

Front 16

Deed in lieu of foreclosure

Back 16

This sometimes known as a friendly foreclosure because it is carried out by mutual agreement rather than lawsuit.

Hint 16

The disadvantage of the deed in lieu of foreclosure to the lender is that it does not eliminate junior liens.