Real Estate Finance, Chapter 7

A lifting clause in a junior loan contract allows the

borrower to refinance without disturbing the status of the junior loan.

Home equity loans are popular among borrowers because the interest they pay on these loans is

deductible on federal income taxes.

A property seller may choose to carry back a portion of the sale price when the buyer

has insufficient cash for the entire down payment.

Equity in one's home is generally acquired through a paydown of the first mortgage balance or a(n)

increase in the property's value.

Unlike other types of home equity loans, home improvement loans may have

longer repayment terms.

Land developers sometimes use junior financing to pay for

offsite improvements.

Lenders solicit borrowers for home equity loans because they can mitigate the risks of these loans by controlling the interest rate and

periodically checking the value of the collateral.

Some lenders provide combinations of first and second mortgages which are known as

piggy-back loans

When home equity loans become due, borrowers usually

refinance the entire property.

The risk inherent in junior finance is that the

senior lender will get all the money at a foreclosure.