Types of real estate loans Flashcards

Types of real estate loans Flashcards Amortized LoanThis loan is paid off slowly over time in equal payments.Paying off interest and principal at same time Straight loan (term loan)The borrower makes periodic payments of interest only, followed by the payment of the prinicipal in full at the end of the term Reverse Annuity Mortgage (RAM)Allows senior citizens on fixed incomes to utilize the equity buildup in their homes by receiving regular monthly payments from the bank. Bank owns property upon passing of client.Growing Equity Mortgage (GEM)A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan. (Rapid payoff mortgage) Balloon Payment Loan (partially amortized loan) A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.Interest Only LoanA mortgage in which the borrower pays only interest for a specific term. at the end of the term, typically 5 to 10 years, the loan is converted to a fully amortizing loan is which both interest and principle are paid.Adjustment rate mortgage (ARM)Lon has adjustable interest rate. Lon repayments May change because the interest rate changes.Parts to straight loan2 parts (separate payments for interest and principal)