Real Estate Finance I-CHAMPIONS| 60 Questions With 100% Verified Solutions

Loan-to-Value Ratio (LTV) - correct answer--The 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 - correct answer--Includes both real and personal property ( fixtures and furnishings) Blanket Mortgage - correct answer--Covers more than one piece of property. Wraparound Mortgage - correct answer--Method of financing which preserves the low, existing interest rate on the original note. Open-End Mortgage - correct answer--Permits additional borrowing on the same note. This is sometimes called a credit card mortgage or a home equity line of credit - HELOC. Budget Mortgage - correct answer--The monthly house payment includes principal, interest, taxes and insurance (known as PITI) Collateral -Dependent Loans - correct answer--A 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 - correct answer--Is a measure of the willingness of a borrower to make on-time payments. Credit character is revealed in the borrower's credit report. Capacity - correct answer--Is a measure of the borrower's ability to repay the debt, and is demonstrated through current earnings and job stability. Capital - correct answer--Is the sum of all assets that the borrower has accumulated. Collateral - correct answer--Is something of value that can be pledged as security for repayment. Yield - correct answer--Is the return that the investor recieves over the life of the loan. (Also known as profit) Originator - correct answer--The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower. Mortgage Broker - correct answer--Typically 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 - correct answer--Entities which provide their own funds for the purpose of providing mortgage financing, as opposed to commercial banks/savings associations. (Held, or "Warehoused") Correspondent Lender - correct answer--Usually smaller in scale than mortgage bankers or brokers, these lenders typically extend loans with their own funds, at their own risk. Processing - correct answer--Once application is complete the file moves into this phase. Underwriting - correct answer--The detailed process of evaluating a borrower's loan application to determine the risk involved for the lender. Closing - correct answer--The consummation of a real estate transaction in which all appropriate documents are signed and the proceeds of the mortgage loan are then disbursed by the lender. Servicing - correct answer--Includes collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance ( and managing escrow and impound funds) remitting funds to the note holder, and following up on delinquencies. Supply and Demand - correct answer--an economic concept that states that the price of a good rises and falls depending on how many people want it and depending on how much of the good is available. Funding - correct answer--The process of transferring funds to a title or escrow company for disbursement The Safe Act - correct answer--Designed to enhance consumer protection and reduce fraud. (Key component of HERA) M1 - correct answer--Is defined as the sum of currency held by the public and transaction deposits at depository institutions.