PSI Real Estate Exam Financing.pdf file:///C:/Users/HP/Desktop/New%20folder%20(2)/PSI%20Real%20E
PSI Real Estate Exam Financing
1. Acceleration Clause: A contract clause that gives the lender the right to declarethe
entire loan amount due immediately because of borrower's default, or other reasons
as stated in the contract.
2. Adjustable-Rate (ARM) Mortgage: A mortgage that permits the lender to peri-
odically adjust the interest rate so that the rate reflects fluctuations in the cost of
money.
3. Alienation Clause: A contract clause that gives the lender certain stated rights
when there's a transfer of ownership in property. (Often called a Due-On-Sale
Clause.)
4. Allodial System: The system of land ownership where anyone can own land.
5. Amortization: When a loan a loan balance decreases because of periodic install-
ments that pay principal and interest.
6. Balloon Payment: A final payment at the end of a loan term to pay off the entire
remaining balance of principal and interest not covered by payments during the loan
term.
7. Blanket Mortgage: 1. Mortgage that covers more than one parcel of real estate.
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,PSI Real Estate Exam Financing.pdf file:///C:/Users/HP/Desktop/New%20folder%20(2)/PSI%20Real%20E
2. Mortgage that covers an entire building or development, rather than an individual
unit or lot.
8. Bond-Type Securities: Mortgage backed securities issued by GNMA, which are
long-term, pay interest semi-annually, and provide for repayment at a specified date.
9. Buydown: When additional funds in the form of points are paid to a lender at the
beginning of a loan to lower the interest rate and monthly payments on the loan.
10. Collateral: Property pledged as security for a debt.
11. Conforming Loans: Loans that meet FNMA/FHLMC standards, and thus canbe
sold on the secondary market.
12. Credit Report: A listing of a borrower's credit history, including amount of debt,
record of repayment, job info, address info, etc.
13. Credit Scoring: A means by which the lender makes certain determinations re-
garding the creditworthiness of potential borrowers. This involves a lender assigning
specified numerical values to different aspects of a borrower.
14. Credit Unions: Financial institutions that are a type of cooperative organization
where members share something in common (e.g. an employer), pool their deposits
together, pay members better interest rates, and loan money to fellow members.
15. Deed of Trust: An instrument held by a third party as security for the payment of
a note (rarely used in Ohio). Like a mortgage, it creates a voluntary lien on real
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