Champions Real Estate Finance Questions & Answers 100% Correct!

Loan-to-Value Ratio (LTV) - ANSWERSThe percentage of the lesser of the appraised value or sales price that the lender will lend. ex: If a borrower is approved for an 80% loan, it means that the lender will loan up to 80% of the sales price or appraised value, whichever is lower. Package Mortgage - ANSWERSIncludes both real and personal property ( fixtures and furnishings) Blanket Mortgage - ANSWERSCovers more than one piece of property. Wraparound Mortgage - ANSWERSMethod of financing which preserves the low, existing interest rate on the original note. Open-End Mortgage - ANSWERSPermits additional borrowing on the same note. This is sometimes called a credit card mortgage or a home equity line of credit - HELOC. Budget Mortgage - ANSWERSThe monthly house payment includes principal, interest, taxes and insurance (known as PITI) Collateral -Dependent Loans - ANSWERSA hard money loan is a specific type of asset-based financing in which a borrower receives funds secured by the value of a parcel of real estate. Character - ANSWERSIs a measure of the willingness of a borrower to make on-time payments. Credit character is revealed in the borrower's credit report. Capacity - ANSWERSIs a measure of the borrower's ability to repay the debt, and is demonstrated through current earnings and job stability. Capital - ANSWERSIs the sum of all assets that the borrower has accumulated. Collateral - ANSWERSIs something of value that can be pledged as security for repayment. Yield - ANSWERSIs the return that the investor recieves over the life of the loan. (Also known as profit) Originator - ANSWERSThe process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower. Mortgage Broker - ANSWERSTypically functions as a middleman between the borrower and the lender, negotiating, selling or arranging loans to be delivered to larger investors. At one time originated up to 80% of all mortgage loans. (Back on the rise) Mortgage Banker - ANSWERSEntities which provide their own funds for the purpose of providing mortgage financing, as opposed to commercial banks/savings associations. (Held, or "Warehoused") Correspondent Lender - ANSWERSUsually smaller in scale than mortgage bankers or brokers, these lenders typically extend loans with their own funds, at their own risk. Processing - ANSWERSOnce application is complete the file moves into this phase. Underwriting - ANSWERSThe detailed process of evaluating a borrower's loan application to determine the risk involved for the lender. Closing - ANSWERSThe consummation of a real estate transaction in which all a