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Real Estate 413
Chapter 18
8
Business
Undergraduate 4
02/26/2010

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Cards

Term
Interest-only Loans
Definition
Requires that borrower pay interest only payment during the loan term and then pay the full loan amount in one lump sum at the end of the loan term.
Term
Amortizing Loans
Definition
Require equal periodic payments compsed of both interest and principal.  Principal balance of the loan decreases with each payment made.
Term
Prepayment
Definition
A loan is repaid in full before the full term of the loan has expired.
Term
Refinancing
Definition
Retiring the funds of an existing loan with the proceeds of a new loan for the same property.
Term
Discount Points
Definition
The charges of a loan expressed as a percentage of the loan amount.  One discount point is equal to 1% of the loan amount.
Term
Origination Fees
Definition
The same as discount points only expressed in a dollar amount rather than a percentage of the loan.  These charges cover the lender's cost of processing the loan application, obtaining credit reports, and other costs associated with the loan's origination.
Term
Effective Interest Rate
Definition
The actual cost of borrowing funds from a lender, expressed as an annual rate, after consideration of discount points and origination fees.
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