BASICS OF FINANCE 3

Negative amortization is possible with graduated payment and _____ loans.

adjustable rate

A loan in which both principal and interest are paid during the term of the loan is called a(n) _____ loan.

amortized

A wraparound mortgage can be used with _____ existing loan.

an assumable

A purchase money loan can be used with what loan priority?

any mortgage priority

With a term loan, the principal is paid _____.

at the end of the term

The final payment on a partially amortized loan is called a(n) _____ payment.

balloon

A loan in which more than one property is hypothecated as security for a single loan is called a(n) _____ loan.

blanket

A PITI loan is another name for a _____ loan.

budget

An amortized loan that also includes in each payment an amount to cover taxes and insurance is called a _____ loan.

budget

A mortgage in which the seller prepays interest on the buyer's behalf is called a _____ loan.

buydown

With an amortized loan, the amount of the interest in successive payments _____.

decreases

At the time a loan is originated, the owner's equity is equal to the _____.

down payment

With an amortized loan, the payments are _____.

equal

The difference between the market value and the outstanding principal balance on any loans against the property is called the owner's _____.

equity

By the end of the term of an amortized loan, the principal is _____.

fully paid

An amortized loan under which the payments are set low originally and gradually increase over the first few years of the loan is called a(n) _____ loan.

graduated payment

Negative amortization is possible with adjustable rate and _____ loans.

graduated payment

With an amortized loan, the amount of the principal in successive payments _____.

increases

With an adjustable rate loan, the rate of interest is tied to a(n) _____.

index

The money paid for the privilege of using a lender's principal is called _____.

interest

The maximum amount the interest rate can increase over the life of an adjustable rate loan is called the _____.

lifetime cap

With an adjustable rate loan, the amount added to the index to get the interest rate on the loan is called the _____.

margin

When the principal amount on a loan increases during the term of the loan, it is called _____.

negative amortization

A loan under which the borrower can obtain additional money during the term of the loan is called a(n) _____ loan.

open-end

The type of loan used often with "home equity loans" is a(n) _____ loan.

open-end

A real estate loan which also includes a provision for an installment payment on some article of personal property is called a _____ loan.

package

At the end of the term of a partially amortized loan, the remaining principal is _____.

paid in one payment

At the end of the term of a straight loan, the principal is _____.

paid in one payment

A clause which allows for removing one or more properties from a blanket loan is called a(n) _____ clause.

partial release

By the end of the term of a partially amortized loan, the principal is _____.

partially paid

The maximum amount the interest rate on an adjustable rate loan can increase in one adjustment period is called the _____.

periodic interest rate cap

The amount of money borrowed on a loan is called the _____.

principal

The amount of the original loan remaining to be paid at a given point in time is called the _____.

principal balance

A loan from the seller to the buyer to finance all or part of the purchase price of real property is called a _____ loan.

purchase money

When a seller "takes back" a mortgage when financing all or part of the buyer's purchase, the loan used is a _____.

purchase money

When a wraparound mortgage is used, the existing loan _____.

remains in effect

Reverse annuity loans are frequently used by _____.

retirees

A transaction in which the owner sells the property to an investor who then leases the property back to the original owner is called a _____ arrangement.

sale and leaseback

When a buyer uses a wraparound mortgage, the payment on the existing loan is made by the _____.

seller

A loan in which the lender offers the borrower favorable loan terms in exchange for a share of the appreciation from the property when it is sold is called a _____ loan.

shared equity

A term loan is also called a(n) _____ loan.

straight

The period of time over which a loan is repaid is called the _____.

term

The type of loan on which only interest is paid during the term of the loan is called a(n) _____ loan.

term

Negative amortization results from _____.

unpaid interest