2020 study

Amendment

A change to an existing contract Ex. Bill decided not to include the washer and dryer since the buyers were asking for the moon in the inspection. He wrote up an amendment to their original agreement, which they reluctantly signed.

Voidable Contract

A contract that may be legally avoided at the option of one or both of the parties.

Budget Mortgage

A mortgage with payments that cover principal and interest, plus taxes, fire insurance, lease rent. PITI

general agent

A person who is authorized to act for another (the principal or client) in a range of matters Ex. A property manager is the general agent of the owner, and acts for the owner in most matters related to the property.

Title Theory State

A state where the mortgage lender has title to the property until the debt is repaid

Addendum

An addition to a real estate contract that's added before contract acceptance Ex. Steve decided to ask for the washer and dryer after all, so he asked his broker to write up an addendum to the sales contract.

Annual Percentage Rate (APR)

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

Delivery and Acceptance

Delivery is the act of giving the deed to the grantee; acceptance is the grantee's receipt of the deed. Ex. After the buyer and seller closed on the transaction, the deed was delivered to the title company, who provided an acknowledged copy to the buyer. The recording of the deed presumed buyer's acceptance.

Leonard is offered a loan at 5.75%. Because he plans to be in his home for several years, he chooses to pay points up front to have the rate reduced to 5.25%. What's this an example of?

Discount points Buyers may make a one-time payment of discount points to permanently reduce the mortgage loan interest rate they'll pay.

Jason's having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state's usury law. Which of these statements must be true?

His state's personal loan interest rate cap is less than 20%. Usury prohibits excessive interest charges on personal and consumer loans. Many states have a cap on the percentage that can be charged. Jason's deal with his landlord would be in violation if the interest rate is higher than the cap.

What does a balloon payment represent at the end of a loan term?

It means that some principal remains at the end of the loan term. A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.

Federal Fair Housing Act of 1968

Prohibits discrimination based on race, religion, color, and national origin in the sale or rental of residential real estate Ex. The Federal Fair Housing Act of 1968 also created the Office of Fair Housing and Equal Opportunity. Fair Housing Amendments Act of 1988 Added familial status and disability to the protected classes list Ex. Families and persons with disabilities are now protected classes thanks to the Fair Housing Amendments Act of 1988

Lien Theory State

The mortgage merely creates a lien right on the mortgagee with the mortgagor (home owner) retaining the title.

What's the purpose of the Fixed/Adjustable Rate Note?

To convert the interest rate from fixed to adjustable. The note converts the interest rate in an ARM from fixed to adjustable. It's part of the mortgage package.

buy down mortgage

the borrower buys down, or prepays, part of the interest in order to get a lower rate.