Business Management /Virginia Real Estate Principles - Unit 12: Real Estate Financing Part 2
Virginia Real Estate Principles - Unit 12: Real Estate Financing Part 2
This deck covers key concepts and terminology related to real estate financing, including types of loans, mortgage terms, and financial instruments.
Interest-only Loan
A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term.
Tap or swipe ↕ to flip
Swipe ←→Navigate
SSpeak
FFocus
1/21
Key Terms
Term
Definition
Interest-only Loan
A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term.
Loan Origination Fee
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan-to-value Ratio (LTV)
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
Margin
A premium added to the index rate representing the lender’s cost of doing business.
Mortgage
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Mortgagee
A lender in a mortgage loan transaction.
Related Flashcard Decks
Study Tips
- Press F to enter focus mode for distraction-free studying
- Review cards regularly to improve retention
- Try to recall the answer before flipping the card
- Share this deck with friends to study together
| Term | Definition |
|---|---|
Interest-only Loan | A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term. |
Loan Origination Fee | A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount. |
Loan-to-value Ratio (LTV) | The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral. |
Margin | A premium added to the index rate representing the lender’s cost of doing business. |
Mortgage | A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien. |
Mortgagee | A lender in a mortgage loan transaction. |
Mortgagor | A borrower in a mortgage loan transaction. |
Negative Amortization | Process by which the amount of the loan increases. The mortgagor sets a payment cap, or maximum amount for payments, but the difference between the payment made and the full payment amount is added to the remaining mortgage balance. |
Negotiable Instrument | A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee’s right to payment. |
Note | See promissory note. Promissory Note A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party). |
Novation | Substituting a new obligation for an old one or substituting new parties to an existing obligation. |
PITI | The basic costs of owning a home—mortgage principal and interest, real estate taxes, and hazard insurance. |
Prepayment Penalty | A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost. |
Reverse Mortgage | A loan by which a homeowner receives a lump sum, monthly payments, or a line of credit based on the homeowner’s equity in the property secured by the mortgage. The loan must be repaid at a prearranged date, upon the death of the owner, or upon the sale of the property. |
Satisfaction Of Mortgage | A document acknowledging the payment of a mortgage debt. |
Short Sale | Sale of property in which the sales price is less than the remaining indebtedness. |
Straight Loan | A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment. |
“Subject To” | A clause in a contract specifying exceptions or contingencies of a purchase. |
Trustor | A borrower in a deed of trust loan transaction; one who places property in a trust. Also called a grantor or settler. |
Usury | Charging interest at a higher rate than the maximum rate established by state law. |