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34 Cards in this Set
- Front
- Back
__ banks operate under a license or charter from the state or federal government. As far as real estate loans are concerned, there is __ difference between a state and a national bank.
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Commercial; little
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A credit union is a mutual, voluntary-membership, cooperative organization
of people who agree to __ their money together to provide money for __ to each other. |
save; loans
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Institutional lenders such as commercial banks, savings banks,
and life __ companies accept deposits from the general public and are highly __ by state and federal agencies. |
insurance; regulated
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Noninstitutional lenders do not accept __ from the general
public and are not as strictly regulated as institutional lenders. Major noninstitutional lenders include mortgage companies, private parties, real estate investment trusts, credit unions, and pension __. |
deposits; funds
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The term of a private loan is usually short and often calls for a __ payment. Three to __ years are the most common maturities.
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balloon; six
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Most private loans are on single-family homes and __ because this type of property is most familiar to the typical private investor and
because the size of the loan is usually small. |
condos
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Most private lenders operate in the __ trust deed market.
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second
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Life insurance companies are another important source for real
estate financing, particularly for large commercial and industrial properties such as shopping centers, office __, and warehouses. |
buildings
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Life Ins Companies: Loan-to-value ratios are usually on the conservative side, generally in the 60 to __ percent range for conventional financing, commonly
with 30-year terms. |
75
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A mortgage company could be a mortgage __ , a mortgage __,
or both. |
banker; broker
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Mortgage bankers lend their own money and then either resell the loan to another lender or keep the loan for an __.
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investment
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Mortgage brokers do not lend their own money; rather, they find a lender and a borrower and get a fee for __ them together.
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bringing
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What is private mortgage insurance (PMI)? It is insurance that is used to guarantee lenders the payment of the upper portion of a conventional loan if a borrower defaults and a deficiency occurs at the __ sale.
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foreclosure
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Lenders who normally want buyer-borrowers to put at least 20 percent cash down will allow qualified buyer-borrowers to put less down if they purchase private mortgage insurance for a minimum of __ months.
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24
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For example, if a condo sold for
$380,000 and the loan was 90 percent, the loan would be $380,000 x 90% = $342,000. The private mortgage insurance coverage to the __ would be 20% x $342,000 loan = $68,400. |
lender
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Just as mutual funds invest in a diversified portfolio of corporate stocks and bonds, __ invest in a diversified portfolio of real estate and mortgage investments.
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REITs
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The real estate __ trust (REIT) is a creature of the federal tax law.
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investment
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A savings bank is a financial institution that accepts savings from
the public and invests these savings mainly in real estate trust deeds and __. |
mortgages
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Many banks require private mortgage
insurance (PMI) on loans whose loan-to-value ratio is in excess of __ percent. |
80
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A 4:1 multiplier simply means that the monthly income of the borrower should be approximately four times the monthly __ payment.
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housing
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A 4:1 multiplier:
if the monthly housing payment (principal + interest + monthly taxes + private mortgage insurance [if any]) will be $1,000, then four times this amount ($1,000 x 4), or $4,000, should be the borrower’s __ monthly income. |
gross
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Multiplier ratios:
Gross income must include all stable income of the borrower and co-borrowers, such as a spouse’s income, __ payments, and welfare payments as well as regular wages. |
alimony
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Ratios:
Acceptable income includes wages, commissions, alimony, child support, pensions, Social Security benefits, positive cash flow from __, and self-employment income. |
rentals
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Ratios:
The buyer's short-term debts may be ignored, but long-term debts are __. |
counted
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Ratios Summary:
Monthly __ payment ------------------------------------ = 25-30% Gross Monthly Income |
housing
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Ratios Summary:
Monthly (housing + LT debt) ---------------------------------------- = 33-38% __ Monthly Income |
Gross
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People can spend or save (invest) their after-tax income and profits.
When people decide to spend excessively, this reduces the supply of savings available for __. |
loans
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Too much spending -> no money for loans -> drives up interest rates -> more difficult for people to __ for real estate loans -> slows down the real estate market.
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qualify
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A recent law requires PMI insurers to cancel the PMI coverage once a loan amount is reduced to __ percent or less of the value of the home.
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80
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Real estate lenders can be divided into three categories:
(1) __ lenders, (2) noninstitutional lenders, and (3) __ backed programs. |
institutional
government |
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The main government-backed programs include FHA, __, and Cal-Vet.
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VA
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Private mortgage insurance (PMI) usually covers what percent of the loan?
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20-25%
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A person who purchases a note for value at good faith without prior notice of a default or defect is a:
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holder in due course.
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On seller-carry loans for 1 to 4 residential units, a seller financial __ statement is required.
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disclosure
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