Comprehensive Real Estate Principles Save
and Legal Frameworks
Terms in this set (358)
15-Year loan higher DS, but paid off in half the time and usually carries
lower rate
Amortized loan •regular equal payments for life of loan, including both
principal and interest
-Loan fully repaid by maturity
-Each subsequent DS payment has more applied to principal
and less to interest
FRMs' rates do not change
Balloon loan any loan that has a final payment larger than any of the
previous ones
Bi-weekly loan The biweekly payment is exactly one-half of the amount a
monthly payment would be. Though it depends on other
factors such as the interest rate of the loan, a biweekly
mortgage payment plan often saves the consumer money
over the life of the loan.
,Budget Mortgage DS + escrows = [Principal + Interest] + [Taxes + Insurance] =
PITI
Deed in Lieu of Foreclosure borrower and lender voluntarily and amicably pass title, in
exchange for release of liability, -Known as "friendly
forclosure"
-Saves all parties money, time and frustration
-Risky to lender because other liens and encumbrances are
not extinguished
Deed of Trust Advantages •Time between default & foreclosure is short
•Power of sale provision cheaper and simpler
•No statutory redemption
Define fee simple in real estate. The most comprehensive estate one can hold in real estate,
representing full ownership rights.
Discount Points up-front interest charged by lender to increase its NY
One point = 1% of loan
By paying points, lender "discounts" interest rate
Fully deductible as pre-paid interest (unless refinance)
DS Loan x Mortgage Constant
,Equity FMV-UM, Increases when property value increases and/or
UM decreases
Existing Loan make higher payments than required
FHA Insurance Programs •HUD's FHA insures lenders against mortgage default
•Maximum insurance varies by county, with most of Texas' 254
counties being $404,800
-$518,200 (2-unit); $626,400 (3-unit); $778,450 (4-unit)
•Minimum down payment = 3.5%
•Assumable to qualified borrowers
Government's Role in RE, •Four major -Cushion lenders against RE cycles
goals:, •Accomplish these goals: -Increase liquidity of __mortgage markets________________
-Help more families become home owners
-Increase housing conditions for low-income
-Insure and guarantee loans via FHA and VA
-Mortgage subsidies via _____GNMA________________
-SMM provides liquidity and immunizes balance sheets of
lenders
How does the Unit-Comparison method By determining a unit cost (e.g., price per sqft) including
estimate costs? builder's overhead and profit.
, How is the debt service (DS) payment DS = Loan amount x Mortgage Constant (MC).
calculated?
How many members are on the TREC 9 members appointed by the Governor.
board?
Is the Owner's Policy transferable? No, the Owner's Policy is not transferable to a new owner, but
the Lender's Policy is.
LTV UM/FMV
MC ____i____
1 - ____1___
(1 + i ) n
Non-Judicial Foreclosure Texas + 41 other states use Power of Sale to simplify
foreclosure process
Origination fee fee lender charges for making loan, usually stated as a
percentage of loan
IRS considers fee another point, so also deductible as
interest
and Legal Frameworks
Terms in this set (358)
15-Year loan higher DS, but paid off in half the time and usually carries
lower rate
Amortized loan •regular equal payments for life of loan, including both
principal and interest
-Loan fully repaid by maturity
-Each subsequent DS payment has more applied to principal
and less to interest
FRMs' rates do not change
Balloon loan any loan that has a final payment larger than any of the
previous ones
Bi-weekly loan The biweekly payment is exactly one-half of the amount a
monthly payment would be. Though it depends on other
factors such as the interest rate of the loan, a biweekly
mortgage payment plan often saves the consumer money
over the life of the loan.
,Budget Mortgage DS + escrows = [Principal + Interest] + [Taxes + Insurance] =
PITI
Deed in Lieu of Foreclosure borrower and lender voluntarily and amicably pass title, in
exchange for release of liability, -Known as "friendly
forclosure"
-Saves all parties money, time and frustration
-Risky to lender because other liens and encumbrances are
not extinguished
Deed of Trust Advantages •Time between default & foreclosure is short
•Power of sale provision cheaper and simpler
•No statutory redemption
Define fee simple in real estate. The most comprehensive estate one can hold in real estate,
representing full ownership rights.
Discount Points up-front interest charged by lender to increase its NY
One point = 1% of loan
By paying points, lender "discounts" interest rate
Fully deductible as pre-paid interest (unless refinance)
DS Loan x Mortgage Constant
,Equity FMV-UM, Increases when property value increases and/or
UM decreases
Existing Loan make higher payments than required
FHA Insurance Programs •HUD's FHA insures lenders against mortgage default
•Maximum insurance varies by county, with most of Texas' 254
counties being $404,800
-$518,200 (2-unit); $626,400 (3-unit); $778,450 (4-unit)
•Minimum down payment = 3.5%
•Assumable to qualified borrowers
Government's Role in RE, •Four major -Cushion lenders against RE cycles
goals:, •Accomplish these goals: -Increase liquidity of __mortgage markets________________
-Help more families become home owners
-Increase housing conditions for low-income
-Insure and guarantee loans via FHA and VA
-Mortgage subsidies via _____GNMA________________
-SMM provides liquidity and immunizes balance sheets of
lenders
How does the Unit-Comparison method By determining a unit cost (e.g., price per sqft) including
estimate costs? builder's overhead and profit.
, How is the debt service (DS) payment DS = Loan amount x Mortgage Constant (MC).
calculated?
How many members are on the TREC 9 members appointed by the Governor.
board?
Is the Owner's Policy transferable? No, the Owner's Policy is not transferable to a new owner, but
the Lender's Policy is.
LTV UM/FMV
MC ____i____
1 - ____1___
(1 + i ) n
Non-Judicial Foreclosure Texas + 41 other states use Power of Sale to simplify
foreclosure process
Origination fee fee lender charges for making loan, usually stated as a
percentage of loan
IRS considers fee another point, so also deductible as
interest
