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Champions Real Estate Exam Prep National Ch 7 Questions and Answers
Champions Real Estate Exam Prep National Ch 7 Questions and Answers
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Champions Real Estate Exam PrepNational Ch 7 Questions and Answers
Mortgage Loans - -Most common choice for financing real property. Can be
conventional or non-conventional
-Conventional Loan - -Neither federally insured nor guaranteed
-Non-conventional Loan - -Federally insured/guaranteed mortgage loans to
encourage ownership (FHA, VA, USDA)
-Contract for Deed - -A means by which the seller passes possession but
retains title to the property until the total or a substantial portion of the
purchase price is paid. Installment contract. The two parties here are the
vendor (owner) and the vendee (buyer).
-Hypothecation - -The action of pledging real property as security for a debt
-Promissory Note - -A written promise to pay a specified amount of money
on demand or at a definite time
-Lien Theory - -When mortgage loan is used for purchase of real property,
at closing the buyer receives the title and the lender has a lien
-Title Theory - -At closing the lender receives the title and will hold it until
the lien is satisfied or paid off
-Deed of Trust - -Used instead of a traditional mortgage in Texas. Parties
are borrows (trustor), lender (beneficiary), and trustee
-Power of Sale Clause - -Allows for non-judicial foreclosure
-Trustee (Deed of Trust) - -Acts in fiduciary relationship with beneficiary,
released lien when not is paid or forecloses in the event of default
-Mortgagor - -"Gets the door" - buyer/borrower
-Mortgagee - -"Gets the fee" - lender
-Primary Market - -Market where consumers go to borrow money (mortgage
bankers, mortgage brokers, banks, credit unions)
, -Secondary Market - -Market where lenders go for money. Exists for the
purchase and sale of existing mortgages to investors → greater liquidity to
residential real estate market
-Conforming Loans - -Loans qualified to be purchased in the secondary
market. Meet purchase requirements of Fannie Mae and Freddie Mac
-Secondary Market Warehousing Agencies - -Fannie Mae, Freddie Mac,
Ginnie Mae
-Freddie Mac Forms - -Used to ensure loans can be sold in secondary
market
-Fixed-Rate Amortized Loan - -Equal, regular payments of principal and
interest until loan is repaid
-Interest Paid In Arrears - -Paid at the end of each payment period
-Term Loan - -Straight-loan, interest only paid until end of the term when
the entire principal is repaid (zero amortization)
-Blanket Loan - -Covers more than one piece of property. Contains release
clause
-Release Clause - -Allows borrower to obtain partial release of specific lots
by making required lump sum payments
-Package Loan - -Includes real property plus personal property (i.e. a
furnished condo)
-Budget Loan - -Includes PITI in monthly payments (principal, interest,
taxes, insurance)
-Balloon Loan - -Partially amortize with final payment substantially larger
than others → benefit of lower interest rate, disadvantage of high cost of
refinancing
-Participation Loan - -Two or more lenders invest in one loan
-Shared Appreciation Mortgage - -Lenders collect principal and interest and
shares in profits when the property is sold
-Open-End Mortgage - -Permits additional borrowing on the same loan
(HELOC - home equity line of credit)
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