Champions Real Estate Finance Q&A- 2024
Loan-to-Value Ratio (LTV) - ️️ - 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 ...
Loan-to-Value Ratio (LTV) - ✔️✔️- 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 - ✔️✔️- Includes both real and personal property ( fixtures and
furnishings)
Blanket Mortgage - ✔️✔️- Covers more than one piece of property.
Wraparound Mortgage - ✔️✔️- Method of financing which preserves the low, existing
interest rate on the original note.
Open-End Mortgage - ✔️✔️- 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 - ✔️✔️- The monthly house payment includes principal, interest,
taxes and insurance (known as PITI)
Collateral -Dependent Loans - ✔️✔️- 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 - ✔️✔️- 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 - ✔️✔️- Is a measure of the borrower's ability to repay the debt, and is
demonstrated through current earnings and job stability.
Capital - ✔️✔️- Is the sum of all assets that the borrower has accumulated.
Collateral - ✔️✔️- Is something of value that can be pledged as security for repayment.
Yield - ✔️✔️- Is the return that the investor recieves over the life of the loan. (Also
known as profit)
Originator - ✔️✔️- The process of creating a new mortgage loan, including all steps
taken by a lender to attract and qualify a borrower.
Mortgage Broker - ✔️✔️- 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 - ✔️✔️- 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 - ✔️✔️- Usually smaller in scale than mortgage bankers or
brokers, these lenders typically extend loans with their own funds, at their own risk.
Processing - ✔️✔️- Once application is complete the file moves into this phase.
Underwriting - ✔️✔️- The detailed process of evaluating a borrower's loan application
to determine the risk involved for the lender.
Closing - ✔️✔️- 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 - ✔️✔️- 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 - ✔️✔️- 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 - ✔️✔️- The process of transferring funds to a title or escrow company for
disbursement
The Safe Act - ✔️✔️- Designed to enhance consumer protection and reduce fraud.
(Key component of HERA)
M1 - ✔️✔️- Is defined as the sum of currency held by the public and transaction
deposits at depository institutions.
M2 - ✔️✔️- Is defined as M1 plus saving deposits, small-denomination time deposits
(those issued in amounts of less than $100,000) and retail money market mutual funds
shares.
Fiat Money - ✔️✔️- Is currency that is not backed by any precious metals at all.
Monetary Policy - ✔️✔️- Is the maintenance of a stable money supply that provides for
growth in the economy while keeping inflation in. The federal reserves is responsible for
this policy in the United States.
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