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Real Estate Table Review Verified and 100% Correct Q & A, Complete Document for Exam
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Real Estate Table Review Verified and 100% Correct Q & A, Complete Document for Exam
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Real EstateTerm Definition
Voluntary lien lien placed with owner's consent, like mortgage or trust deed
Involuntary lien lien placed without consent of owner, like judgment
court's final decision of rights or obligations of involved parties -
Judgment
once filed creates general lien
lien placed on property based on work or furnished materials;
Mechanics Lien
filed for nonpayment of labor; takes priority over mortgage
placed on property by law, like real estate property taxes or
Statutory Lien special assessments (pay for public improvements like
sidewalks)
Equitable lien placed on property by written contract
"suit pending"; pending lawsuit, litigation has been recorded;
Lis pendens
foreclosure wipes this out
Deficiency judgment legal judgment given when deed is not enough to cover debt
Junior lien lien below or after senior lien (senior lien is paid first)
General lien lien on all property - real and personal
Specific lien lien directly tied to property
arrangement where legal title is transferred from trustor to
Trust
trustee
value of less expensive properties will increase when placed in
Progression
area of more expensive properties
4 elements of value scarcity, transferability, utility, demand (STUD)
ratio between net operating income and its capital cost (original
Capitalization (cap) rate
purchase price); rate of annual return
joint tenancy only for married couples, created by will or deed;
cannot sell interest; in case of divorce becomes tenants in
Tenancy by the entirety
common (& right of survivorship disappears); free from dead
spouse's creditors
Gross Rent Multiplier purchase price of RE investment / annual rental income before
(GRM) expenses (taxes, insurance, utilities)
social or external deterioration (abandoned gas station next
Economic Obsolescence
door, etc. - outside control)
Functional Obsolescence functional problems or poor design (within control)
pledge of property to lender as security for payment of debt
Financing
(mortgagor = borrower)
Lien legal interest that creditor has in person's property
Lien theory state gives lender lien interest in property
lender holds title to property (lender owns property until debt is
Title theory
repaid)
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
right to possession with right to acquire legal title once a
Equitable title
condition has been met
once borrower (trustor) has made all payments to lender, trustee
(title co/attorney) issues reconveyance deed to trustor; used in
Reconveyance deed
conjunction with trust deed to clear title of any liens pertaining to
Note & trust deed
Discount point = 1% of loan amount
Origination fee fee paid to lender for processing loan application
not part of gov't housing program; usually putting less than 20%
Conventional loan
down; may require PMI
Private mortgage insurance
insures lender in case of default
(PMI)
gradual reduction of loan debt thru periodic installment payments
Amortization (full amortized = paid off at end of loan term; partially amortized
= not fully paid off)
written contract between borrower and lender, providing
Promissory note
evidence of indebtedness
Fannie Mae (Fed. National fed sponsored private corp. provides secondary market for
Mortgage Assoc.) housing mortgages
Ginnie Mae (Gov't National gov't part of secondary market deals in recycling VA and FHA
Mortgage Assoc.) mortgages, especially ones highly leveraged
real estate financing professionals acting as intermediary
Mortgage Broker between consumers and lenders during mortgage transactions;
usually originates loans while lender funds them
direct mortgage lender; no middlemen (= broker and lender in
Mortgage banker
one)
obtaining a lower interest rate by paying additional points to the
Buy down
lender; results in lower payments which are easier to qualify for
interest or value remaining after payments of all liens on
Equity property (money left over after you pay off debt (if house sells for
$300k and you owe $200k = $100k equity))
Home equity line of credit usually has set limit, can be used like credit card; payments are
(HELOC) usually interest only and principal amount is due at the end
mortgage with interest rate that changes over time in line with
Adjustable rate mortgage
movements in the index; usually contains rate cap, which limits
(ARM)
adjustments that can change over life of loan
Payment cap Maximum adjustment amount for payment
Adjustment period how often rate cap can be changed
covers more than one parcel in a lot; may be negotiated by a
Blanket mortgage
developer
provision found in blanket mortgage enabling mortgagor to
Release clause obtain partial releases of specific parcels from the mortgage
upon payment
rapid payoff mortgage; monthly payments increase which
Growing equity mortgage
applies directly to principal, reduces loan term
Graduated payment flexible payment plan; payments start low and increase each
mortgage year for specific amount of years then level off for remaining
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