Real Estate Ch 20 Part 2

Front 1

Amortized mortgage

Back 1

portion of payment goes toward paying the principle and a portion toward interest.

Front 2

Term Loan

Back 2

entire payment goes to interest and principle is paid in full at the end in one payment called the balloon payment

Front 3

Partially Amortized Mortgage

Back 3

aka: Balloon Mortgage

Payments are calculated over a longer term, use a short period.

Payments are applied to interest and principle.

Front 4

Purchase Money Mortgage

Back 4

Seller Financing

Avoids traditional finance fees.

Front 5

Blanket Mortgage

Back 5

Encumbers 2 or more properties and uses a Partial release clause for sale of one property.

Front 6

HELOC

Back 6

Home Equity Line of Credit

Borrow an amount of money back up to the original amount.

Front 7

Package Mortgage

Back 7

A loan that encumbers real and personal property.

Only allowed on commercial and industrial in PA.

Front 8

Wraparound Mortgage

Back 8

includes, encompasses, and wraps around all other existing financing on the property.

buyer would pay lender 2 who would pay lender 1.

"It is what it is"

Front 9

Sale and Leaseback

Back 9

Owner sells and simultaneously enters a lease as a tenant.

allows a seller to pull out equity while maintaining possession.

Front 10

Contract for a Deed

Back 10

aka: land contract or installment contract / sale

buyer makes payments to seller until paid off.

In PA buyers interest is recorded immediately upon agreement.

Front 11

Subordination Agreement

Back 11

changes the priority of the lien

Front 12

Construction Loan

Back 12

aka: interim financing

temporary for building, interest only,

replaced by a permanent loan called (take out loan)

Front 13

Swing Loan

Back 13

aka: Bridge or Gap loan

temporary loan, based on the equity from one home so another can be purchased.

Front 14

ARM

Back 14

Adjustable Rate Mortgage

interest rate adjusts up or down based on an economic index

initial rate is lower so people can qualify for more.

Front 15

Margin

Back 15

the percentage difference between the index and rate charged to borrowers.

Front 16

Interest Rate Cap

Aggregate Cap

Payment Cap

Back 16

max annual increase

max interest rate increase for term of loan

max payment can result in negative amortization

Front 17

3/1 and 5/1 mortgage

Back 17

fixed rate for 3 or 5 years then converts to adjustable rate

Front 18

Graduated Payment Mortgage (GPM)

Back 18

payment increases each year then levels off.

Allows buyers a lower payment early.

Front 19

Growing Equity Mortgage (GEM)

Back 19

yearly increase in payments with increase being applied to principle.

Front 20

Reverse Mortgage

Back 20

allows older people to borrow from their equity by receiving payments.

Helps supplement fixed incomes.

repaid when borrower: moves out, sells, or last survivor dies

Front 21

Buy down financing

Back 21

Temporary reduction in payments

payments up front to reduce the rate of interest.

Front 22

Truth in Lending ACT (TILA)

Back 22

aka: Regulation Z

lenders required to provide information disclosing the costs involved with borrowing money.

Front 23

When advertising, TILA requires disclosure of:

Back 23

Monthly Payment

APR

Term

Finance Charge

Interest Rate

Total Cost

Front 24

FACT: Dodd-Frank ACT created Consumer Financial Protection Bureau

Front 25

TRID =

Back 25

Tilla-RESPA Integrated Disclosures

Includes Loan Estimate (LE) and TILA Disclosures

Must be presented within 3 days with acknowledgment of receiving it.

Front 26

RESPA =

Back 26

Real Estate Settlement Procedures Act