Real Estate Law- Ch 9- Financing Sources in Real Estate Transactions
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23 terms
Terms | Definitions |
|---|---|
 Bridge Loan | Short term loan with a maturity of one to two years that provides the borrower necessary financing to purchase real property. A bridge loan usually is refinanced by a long term loan. |
| Secondary Mortgage Market | Group of investors who purchase mortgage loans from primary mortgage lenders. |
| Conduit Lender | An issuer of bonds secured by residential or commercial mortgages. The payments on the residential or commercial mortgage loans ay the interest and principal on the bonds. |
| Conventional Loan | Loan in which the risk of repayment of the debt rests solely on the ability of the borrower to pay and the value of the security provided by the mortgage. |
| Insured/Guaranteed Loan | Loan in which the repayment of the loan is insured or guaranteed by either a govt agency or a private insurance company. |
| Loan-to-Value Ratio | Ratio of the amount of a mortgage loan to the value of the secured real property. |
| Private Mortgage Insurance | Insurance issued by a private company that insurers a lender against loss it may suffer in the event the debtor defaults on payment of the loan. |
| Subprime Lending | The business practice of making mortgage loans to people who do not have a good credit history or stable income. |
| Primary Market | Lenders who make mortgage loans directly to borrowers. |
| Interest | Charge by a lender to a borrower for the use of money. |
| Fannie Mae | Federal National Mortgage Assoc, a quasi-govt agency organized for the purpose of investing in FHA and VA loans. |
| Freddie Mac | Federal Home Loan Mortgage Corp, a quasi-public corp that purchases and invests in mortgages. |
| Permanent Loan | Long term loan that finances the acquisition of real property or refinances a construction loan on improvements. |
| Construction Loan | Mortgage loan made for the purpose of providing money to construct improvements on real property. |
| Amortization | Reduction of a debt by periodic payments covering interest and part of the principal. |
| Debt Service | Payment of principal and interest on a loan. |
| Fully Amortized Loan | Loan in which the partial payments of principal and accrued interest, if paid for the stated period of time, will result in the entire loan being paid at maturity. |
| Straight-Line Amortized Loan | Mortgage loan in which the borrower will pay a different amount for each installment, with each payment consisting of a fixed amount credited toward principal and an additional amount for the interest due on the balance of the principal unpaid since the last payment. |
| Term Loan | Loan in which the borrower makes periodic payments of interest, with the principal being paid in one installment at the end of the loan term. |
| Graduated Payment Mortgage | Mortgage loan that permits the borrower to pay lower monthly payments for the first few years and larger payments for the remainder of the term. |
| Balloon Payment | Final payment of all unpaid principal and accrued and unpaid interest on the loan, which is greater than the periodic payments on the loan. |
| Partially Amortized Loan | Loan on which the required payments of principal and interest, if paid for the stated period of time, will not pay the loan in full. Final payment will be the balance due on the loan and will be a larger payment than the previous payments. |
| Negative Amortization | Loan on which the payments are not sufficient to pay the interest costs of the loan. The unpaid interest is added to the principal of the loan, resulting in an increase in the principal amount of the loan during the term of repayment. |
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