Real Estate Finance, Edition 9, Chapter 7 Quiz
A lifting clause in a junior loan contract allows the
borrower to refinance without disturbing the status of the junior loan. p.204
Home equity loans are popular among borrowers because the interest they pay on these loans is
deductible on federal income taxes. p.205
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. p.202
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. p.205
Unlike other types of home equity loans, home improvement loans may have
longer repayment terms. p.206
Land developers sometimes use junior financing to pay for
offsite improvements. p.202
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. p.205
Some lenders provide combinations of first and second mortgages which are known as
piggy-back loans. p.202
When home equity loans become due, borrowers usually
refinance the entire property. p.205
The risk inherent in junior finance is that the
senior lender will get all the money at a foreclosure. p.203