Real Estate Financing Flashcards

A seller finances the buyer's purchase directly by accepting a note and mortgage instead of full cash payment. This is called a:

Answer: Purchase money mortgage

A purchase money mortgage is created when the seller extends credit to the buyer as part of the property sale transaction.

Which type of mortgage uses one loan to finance multiple properties simultaneously?

Answer: Blanket mortgage

A blanket mortgage covers two or more parcels of real estate under a single loan, often used by developers.

A VA loan guarantee benefit is available to eligible veterans and allows them to purchase a home with:

Answer: No down payment required

VA-guaranteed loans allow eligible veterans to purchase a home with no down payment and without private mortgage insurance.

In a mortgage, which clause releases the lien on the property once the debt is fully paid?

Answer: Defeasance clause

The defeasance clause requires the lender to release the mortgage lien once the borrower has fully repaid the debt.

Which loan type is typically used by investors to fund a quick property purchase before obtaining permanent financing?

Answer: Bridge loan

A bridge loan is a short-term loan that 'bridges' the gap between a property purchase and securing long-term financing.

When a second mortgage lender agrees to accept a lower priority lien position behind a new first mortgage, this is called:

Answer: Subordination

Subordination is the process by which a junior lienholder agrees to maintain a lower priority position relative to a new senior lien.

A lender who originates loans and holds them in their own portfolio rather than selling them is known as a:

Answer: Portfolio lender

A portfolio lender originates and retains loans in its own portfolio instead of selling them to the secondary market.