Principles Of Real Estate Finance! Trivia Quiz

Before the Great Depression of 1929-1939, it was possible to buy a house in the United States with as little as 5% down.

The legal document through which a loan is obtained to purchase real property is called a mortgage.

The document used to secure payment of the loan to buy a property is called a mortgage.

The mortgage represents a portion of the total value of the real estate that is expressed by the financial phrase "loan to value ratio" (the relationship between the loan and the value of the property).

A mortgage is provided by lenders who charge interest for the use of the borrowed money to make a profit. The loan amount is known as the "principal".

Charging an excessively high rate of interest is known as gouging the buyer.

The mortgage application fee is a fee that is paid by the seller and is usually paid at settlement. The fee is refundable if a mortgage cannot be obtained.

The mortgage origination fee is a fee to originate or obtain the mortgage. It is often referred to as "points". In real estate, the word "point" means percent.

Lenders require "private mortgage insurance" to provide insurance coverage for the amount of any unpaid mortgage balance if it is ever discovered there is a defective title of the real property owner. The policy is paid by the borrower but is issued to the lender as their beneficiary.

Pledging of real property as collateral security while the borrower still retains possession and use of the property are called hypothecation. It is done as a precaution so that in the event the borrower fails to perform on the contract, such as the failure to make the mortgage loan payments on schedule the lender can institute a legal procedure known as a foreclosure to recover the balance of borrowed money.

An "amortized mortgage"is one in which regular payments consist only of interest. The loan principal is required to be paid at the end of a term loan in a large lump sum payment.

The change in the type of mortgage financing from term loans to amortized mortgages caused by the Great Depression contributed to a significant increase in real property ownership in the United States. Today, government statistics indicate that more than two-thirds of the population of the United States live in dwellings that are owned by the inhabitants, as opposed to renting.

The "alienation provision" in the mortgage indicates that if the real property on which the loan exists is sold, the borrower is required to pay off any remaining mortgage debt in full. FHA and VA mortgages always include this provision.

All of the direct lenders that are available in the marketplace are collectively referred to as the primary mortgage market.

The most dominant buyer of mortgages from the primary mortgage market is the Federal National Mortgage Association, known commonly in financial markets as Freddie Mac.