Mortgage types, amortization, cap rate, and other core real estate financing terms for everyday learners.
35 cards · basic cards · AI-written, checked twice. Edit anything.
- What is a fixed-rate mortgage?
Show answer
A mortgage where the interest rate stays the same for the entire loan term.- What is an adjustable-rate mortgage (ARM)?
Show answer
A mortgage where the interest rate changes periodically, usually starting lower than fixed rates.- Define amortization.
Show answer
The process of paying off a loan through regular installments of principal and interest over a set period.- What is a capitalization rate (cap rate)?
Show answer
The annual rate of return on a real estate investment property, calculated by dividing net operating income by property value.- What does loan-to-value (LTV) ratio measure?
Show answer
The percentage of a property's value that is financed through a loan (loan amount divided by property value).- What is principal in a mortgage?
Show answer
The original amount of money borrowed in a mortgage, not including interest.- What is interest in a mortgage?
Show answer
The charge imposed by the lender for borrowing money, expressed as a percentage of the principal.- What is a down payment?
Show answer
The amount of money a buyer pays upfront to reduce the loan amount needed to purchase a property.- What are closing costs?
Show answer
Fees and expenses paid at the closing of a real estate transaction, including appraisal, title search, and loan origination fees.- What is an escrow account?
Show answer
A neutral account held by a third party during a transaction, used to hold funds until the transaction conditions are met.- What is the difference between preapproval and prequalification?
Show answer
Prequalification is an estimate of borrowing power; preapproval involves verification of financial information and carries more weight.- What are discount points?
Show answer
Fees paid upfront to reduce the interest rate on a mortgage, with each point typically costing 1% of the loan amount.- What is the difference between APR and interest rate?
Show answer
The interest rate is the percentage charged on principal; APR includes the interest rate plus other costs and fees expressed as an annual rate.- What is an amortization schedule?
Show answer
A table showing each loan payment with the amount going to principal and interest, plus the remaining balance after each payment.- What is equity in a property?
Show answer
The difference between the current market value of a property and the amount owed on the mortgage.
FlashKeepers