Real Estate Finance and Lending Fundamentals Quiz

Bank loans are a common source of real estate financing, providing funds for property purchases.

LTV stands for Loan to Value, representing the ratio of the loan amount to the property's appraised value.

A real estate appraisal assesses the property's market value, crucial for determining its price in sales transactions.

A Real Estate Investment Trust (REIT) is a common investment vehicle that pools funds from multiple investors to invest in real estate properties.

Private Mortgage Insurance (PMI) is insurance coverage that protects lenders in case borrowers default on their conventional mortgage loans, usually required for loans with higher LTV ratios.

Amortization refers to the gradual repayment of a loan through scheduled installments over a specific period.

The color of the property is not a factor in determining mortgage interest rates; factors such as credit score, loan amount, and market conditions influence rates.

Equity in real estate finance refers to the homeowner's ownership interest, calculated as the property's market value minus the outstanding mortgage balance.

A title company facilitates the transfer of property ownership by ensuring the title is clear and handling the necessary paperwork and documentation.

Fannie Mae and Freddie Mac are government-sponsored enterprises that purchase and guarantee mortgages from lenders, providing liquidity to the mortgage market and promoting homeownership.

A balloon payment is a sizable final payment due at the end of a loan term, often associated with short-term financing.

A prepayment penalty is a fee imposed on borrowers who pay off their loan balance earlier than the agreed-upon term, typically to compensate lenders for lost interest.

A real estate escrow account holds funds for property taxes, insurance premiums, and other related expenses, ensuring they are paid on time.

A land lease agreement is a contract between a landlord (property owner) and tenant (lessee) that allows the tenant to use the land for a specified period in exchange for rent payments.

A non-recourse loan is a type of loan where the borrower is not personally liable for repayment, and the lender's recourse is limited to the collateral securing the loan.