Download Mortgage/Banking

Resource Management
Mrs. Windi D. Turner
Mortgage Quiz
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A mortgage that permits the lender to
periodically adjust the interest rate on the
basis of changes in a specified index.
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A report of a real estate property's estimated
value based on an analysis that includes
references to the sale of comparable
properties.
The professional who performs appraisals is
called an appraiser.
Lenders usually require an appraisal to ensure
that the mortgage loan amount is not more
than the property's value.
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The fee that a mortgage lender charges when
you apply for a mortgage to cover processing
costs.
You may be charged an application fee when
applying for an apartment rental.
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The value placed on property for the purpose
of taxation.
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A mortgage requiring a large payment at the
end of the loan term.
These mortgages generally have very low
interest rates for an initial time period
(usually 5, 7 or 10 years) with low monthly
payments.
At the end of the period, the entire balance is
due.
Many borrowers pay the balance by
refinancing the mortgage.
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Any borrower other than the first borrower
whose name appears on the application and
mortgage note, even when that person owns
the property jointly with the first borrower
and shares liability for the note.
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A loan for financing the cost of construction
or improvements to a property.
The lender disburses payments to the builder
at periodic intervals during construction.
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A lender's binding offer to loan money at a
future date subject to the borrower's
compliance with stated conditions.
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A legal document that conveys title to real
estate to a disinterested third party (a trustee)
who holds the title until the borrower has
repaid the debt.
In some states, this document is used in
place of a mortgage.
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An item of value, money or documents
deposited with a third party to be delivered
upon the fulfillment of a condition.
Examples are funds you deposit with the
lender to pay taxes and insurance premiums
when they become due, or funds or
documents you deposit with an attorney or
escrow agent to be disbursed upon the
closing of a real estate sale.
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Comes from the company's initials, Federal
National Mortgage Association (FNMA).
A public company that operates under a
federal charter and is the nation's largest
source of financing for home mortgages.
Fannie Mae does not lend money directly to
consumers, but purchases mortgage loans
from institutions that lend directly to
consumers.
Shares in the company are bought and sold
on the New York stock exchange.
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An agency within the U.S. Department of
Housing and Urban Development (HUD) that
insures mortgages and loans made by private
lenders.
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A loan that is insured by the Federal Housing
Administration (FHA) of the U.S. Department
of Housing and Urban Development (HUD).
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A fee charged by independent mapping firms
to identify properties in areas designated as
flood zones.
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A form required by the Real Estate Settlement
and Procedures Act (RESPA) that discloses an
estimate of the amount or range of charges
for specific settlement services the borrower
is likely to incur in connection with the
mortgage transaction.
It must be provided to a borrower within
three days of a mortgage loan application.
The lender's estimate is not a guarantee and
actual charges can be more or less.
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A type of revolving loan account that enables
a homeowner to obtain multiple advances of
the loan proceeds at his own discretion, up to
an amount that represents a specified
percentage of his equity in the property.
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The percentage of a borrower's gross
monthly income that is devoted to housing
costs (principal, interest, taxes and
insurance).
A standard guideline is that your housing
costs should not exceed 25-28 percent of
gross monthly income.
If your monthly gross income is $2,500, then
your monthly housing cost should be $700 or
less.
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Fee or charge by the lender for processing or
evaluating the loan application.
Often expressed as a percentage of the loan
amount, usually 1% of the loan or one point.
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An agreement in which the lender agrees to
guarantee the borrower's interest rate for a
set time period before closing.
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The date on which a mortgage loan is
scheduled to be paid in full, as stated in the
note.
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Any change to the terms of a mortgage loan,
including changes to the interest rate, loan
balance or loan term.
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A loan to finance the purchase of real estate.
The borrower pledges the real estate as
security, or collateral, for the loan by giving
the lender a lien on the property.
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Insurance that protects lenders against losses
caused by a borrower's default on a
conventional mortgage loan.
It typically is required if the borrower's down
payment is less than 20% of the purchase
price.
Also called Private Mortgage Insurance (PMI).
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The cost or the interest rate you pay to
borrow the money to buy your house.
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A written promise, such as a mortgage note,
to pay a specified amount under agreedupon conditions.
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The interest rate stated on a mortgage note
or other loan agreement.
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The total amount of principal owed on a
mortgage before any payments are made.
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An amount of money equal to 1% of the loan
amount.
For example, on an $80,000 loan, one point
would be $800.00 ($80,000 X .01 = $800.00)
Credit Quiz
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A bank's review of your checking account use
history prior to opening a new account for
you.
Some banks may run a full credit report to
determine their level of risk. Others use the
services of companies such as TeleCheck or
ChexSystems.
If you have a history of bouncing checks or
misusing your accounts, institutions may not
open accounts for you.
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The cost of credit stated as a yearly rate.
On a mortgage, the APR includes the interest
rate, points, broker fees and certain other
credit charges that the borrower is required
to pay.
On a credit card, you want to look for a low
APR. If you expect to pay your bills in full
each month, it will be more important to
compare the annual fee and other charges,
rather than APR rates.
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Anything of monetary value that is owned by
a person or company.
Examples are real property, personal
property, stocks and mutual funds.
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The amount of money in your bank account
or the amount you owe on a loan.
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A business that offers you a place to keep
your money and uses it to make more money.
Banks offer a variety of services, such as
checking, savings and certificates of deposits
(CDs).
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A legal process established by federal law
that allows debtors with serious financial
difficulties to eliminate or restructure debts.
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Accounts in which money is deposited for a
set period of time (e.g. 6 months, 1, 2 or 5
years) called a term.
Money in a CD usually earns a higher interest
rate than in a regular savings account.
The longer you promise to keep your money
in a CD, the higher the interest rate.
There usually is a penalty if you withdraw
your money early.
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An account that lets you write checks to pay
bills or buy goods.
The financial institution takes the money
from your account and pays it to the person
named on the check.
The financial institution sends you a monthly
record of the deposits made into the account
and the checks written.
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The process of completing a loan transaction
at which time the mortgage documents are
signed, funds are disbursed and the property
is transferred to the buyer, if applicable.
May be called settlement or escrow in some
states.
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A document that lists all costs to close a real
estate purchase or refinance transaction.
HUD-1 Settlement Statement
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An offer made in return by the person who
rejects the previous offer.
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A person's ability to borrow money or obtain
goods with payments over time, because the
lenders holds a favorable opinion of the
person's financial situation and reliability.
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A record of an individual's debts and
repayment.
A credit history helps a lender to determine
whether a potential borrower has a history of
repaying debts in a timely manner.
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A file that contains information on where you
work and live, how you pay your bills and
whether you've been sued or arrested, or
have filed for bankruptcy.
Credit reports are used by credit card
companies, banks, employers, landlords, and
insurance companies.
If you've ever applied for a charge account, a
personal loan, insurance or job, there's a file
about you.
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A person to whom money is owed.
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A computer-generated number that summarizes
an individual's credit profile and predicts the
likelihood that a borrower will repay future
obligations.
This number is your credit rating. Credit scores
are produced by Fair Isaac Corporation and are
called FICO® scores from the company's initials.
Most lenders approve loans and decide what
interest rate to charge based on your credit
score. You have three credit scores, one for each
of the three national credit reporting companies:
Experian, Equifax and Trans Union. Improving
your credit score lowers the cost of borrowing by
qualifying you for lower interest rates.
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A plastic card, sometimes called a check card.
The debit card has a MasterCard or Visa logo
and a magnetic strip on the back that allows
payment for goods and services at businesses
that accept MasterCard or Visa credit cards.
When paying with a debit card, the money is
immediately taken electronically from your
bank account.
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An amount owed to another.
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The legal document that transfers title
(ownership) of real property from one party to
another.
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Failure to make a payment when it is due.
The condition of a loan when a scheduled
payment has not been received by the due
date, but generally used to refer to a loan for
which payment is 30 or more days past due.
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Money added to your checking or savings
account.
To add money, you must fill out a deposit slip
that tells the bank how much money you are
adding to your account.
Depending on whether you deposit cash, a
payroll check or a check drawn on an out-ofstate bank, you may not have immediate use of
the funds.
The bank first must make sure there are funds at
the originating bank to cover your check. You
may ask the bank when you can use the money
you deposited.
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The amount of money you put down on the
purchase of a house to hold it until financing
arrangements are competed.
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A method by which an employer or
government agency can send your paycheck
or benefit check directly to your checking or
savings account electronically.
Some banks do not charge monthly account
fees if direct deposit is used.
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A federal law that prohibits discrimination in
any aspect of a credit transaction because of
an applicant's race, color, religion, national
origin, sex, marital status, age, receipt of
income from a public assistance program or
good faith exercise of any right under the
Consumer Credit Protection Act.
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A financial institution's charge for services.
For example, a monthly maintenance fee may
be charged for keeping your account open.
You also may be charged a penalty fee if you
misuse your account, such as by bouncing a
check.
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The grace period is the number of days you
have to pay a balance before a creditor starts
charging interest. Once you receive your
monthly bill, you will have 2-3 weeks to pay
your bill interest-free.
If your credit card issuer does not provide a
grace period, a finance charge may be
imposed from the date you use your card or
the date the transaction is posted to your
account.
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An increase, over time, in the general level of
prices.
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A request for a copy of your credit report. An
inquiry occurs every time you fill out a credit
application and/or request more credit.
Too many inquiries on a credit report can
lower your credit score.
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Retirement plans offered by some private
companies and non-profit organizations that
allow you to deduct part of your paycheck and
place it into the investment program you design.
The plans allow you to choose different types of
investments, depending on how much risk you
want to take.
Money invested in a plan lowers your taxable
income. Employers usually will match a portion of
your contribution, sometimes up to 50%.
The funds grow, tax-free, until the money is
withdrawn during retirement.
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Similar to a check and used to pay bills or
make purchases in cases where cash is not
accepted.
Many businesses sell money orders.
The price varies from business to business.
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Any property that is not real property.
Furniture, jewelry and television sets are
examples of personal property.
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A line of credit that may be used repeatedly
up to a specified amount.
Payment may be made at the end of each
billing period or over several billing periods.
A finance charge is added to the unpaid
balance.