Types of Estates Leasehold Estate - expires on definite date; implies only right to possess and use property owned

by another Fee Simple Estate - represents most complete form of ownership of real estate. Right to sell, lease, and use as collateral Estate for Years - created by a lease that specifies exact duration for tenancy. Title: the legal term given for the collection of rights in a property and serves as the document for evidence of ownership. It links the ownership entity to the property. Deed: the legal document that conveys the title to the owner and also the document filed with the county which is the public record of ownership. General Warranty Deed: Most Desirable Deed, free from encumbrances Special Warranty Deed: Free of encumbrances at the time of the last owner Quitclaim Deed: Least Desirable Deed, no warranty on bad claims IRR (Internal Rate of Return, Discount Rate, Hurdle Rate) is the required return on your investment. NPV NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. NPV, take the difference of cist and todays present value If PV is less than or equal to cost then you make the investment What is Par Par is the amount borrowed normally referred as the face or principal value Annuity is an investment offering a series of constant periodic payments for a given amount of time Yield Curve - A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. It is arbitrage free struction. Nominal Return: The return generated before inflation and fees (Real Return+Inflation) Real Rate of Return: The actual return after inflation and fees (Nominal Return Inflation) Types of Loans: Recourse: debt that allows the lender to pursue other assets of the borrower in lieu of default, this has personal liability Nonrecourse: where the debt is limited by value of the collateral , the borrower is not personally liability. This has value of good underwriting.

Mechanic or Junior lien put on a property by an unpaid contractor, worker or material supplier whose collateral for payment becomes the property Deficiency Judgment: Court orders that make you personally liable for unpaid debt. When you do not have an exculpatory clause and the property does not settle the debt then the lender sues. Short Sale: Agreed upon sale of property before foreclosure process begins. Lender agrees to settle loan with proceeds of sale.
BEY or Bond Equivalent Yield: Get Par/Face Value by multiplying the current price percentage to the face. You are looking for the interest. APR or Effective Interest Cost When calculating, always keep previous PMT when you put in NEW PV after origination fees. -Borrowers who expect to keep the same loan receive greater benefits from paying origination fees. -Borrowers who expect to retire the loan at an earlier date may be better off paying the higher rate associated with no points. Loan to Value Ratio (LTV) The percentage of the home that is a loan borrowed from the bank 15 Year Mortgages Larger Principal Payments Builds equity in the home faster Earlier Maturity Lower borrowing rate Interest Only Mortgages No amortization for a period of time Lowers early payments at the expense of larger payments later No equity buildup during IO period Harder to qualify for an IO loan Not allowed for FNMA or FHLMC under current proposals Fixed Rate Balloons Loan is due on a date earlier than the amortization schedule is created Penalties: Hard: Applies whether the reason for prepayment is the sale of the home or for refinancing. Soft: Applies only if the loan is retired early in order to refinance. Partial: Partial prepayments up to X% of the loan amount can be made without penalty.