Terms Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Terms flashcards as text
What is a 'short sale' in real estate and mortgage terms?
Answer: Selling a property for less than the outstanding mortgage balance with lender approval
A short sale occurs when a lender agrees to accept the sale proceeds of a property even though the amount is less than the remaining mortgage balance, typically to avoid foreclosure.
What is 'mortgage forbearance'?
Answer: A temporary pause or reduction of mortgage payments granted by the lender during financial hardship
Mortgage forbearance is an agreement between lender and borrower that temporarily suspends or reduces payments during periods of financial hardship, with repayment arranged afterward.
What does the term 'assumable mortgage' mean?
Answer: A mortgage that can be transferred from the seller to the buyer, who takes over the existing loan terms
An assumable mortgage allows a homebuyer to take over the seller's existing mortgage, including its interest rate and remaining balance, subject to lender approval.
What is a 'deed of trust' as opposed to a mortgage?
Answer: A three-party security instrument used in some states where a trustee holds title until the loan is repaid
A deed of trust involves three parties—borrower, lender, and a neutral trustee—who holds legal title to the property as security until the loan is paid off, used instead of a traditional mortgage in many states.
What is a 'piggyback loan' in mortgage financing?
Answer: A second mortgage taken simultaneously with the first to avoid PMI or cover the down payment
A piggyback loan is a second mortgage taken at the same time as the first, commonly structured as 80/10/10 to avoid PMI when the borrower has only 10% down.
What is 'predatory lending' in the mortgage industry?
Answer: Unfair, deceptive, or abusive loan terms and practices that exploit borrowers, especially vulnerable ones
Predatory lending involves deceptive or exploitative practices—such as excessive fees, inflated rates, or misleading terms—that harm borrowers, often targeting those with limited financial knowledge.
What is 'equity stripping'?
Answer: A predatory practice of loading a property with debt to drain the owner's home equity
Equity stripping is a predatory tactic where lenders or investors burden a property with excessive debt—often through high-fee refinancing—leaving the homeowner with little or no equity.