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Consumer News and Advice Archive


What is a lease option?

It is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property. The option only binds the seller; the tenant has a choice to make a purchase or not. ...


What is seller financing?

Also known as a purchase money mortgage, it is when the seller agrees to "lend" money to the buyer to purchase and close on the seller's home. Usually sellers do this when money is tight, interest rates are high or when a buyer has difficulty qualifying for a conventional loan ...


What is a bridge loan?

It is a short-term bank loan of the equity in the home you are selling. You may take out a bridge loan, or interim financing, to help with a knotty situation: closing on the home you are buying before you close on the property you are selling. This loan basically ...


Is a reverse mortgage good for elderly homeowners?

A reverse mortgage is an increasingly popular option for older Americans to convert home equity into cash. Money can then be used to cover home repairs, everyday living expenses, and medical bills. ...


What is a wraparound loan?

Also called an all-inclusive mortgage, it is where a new home loan is placed in a subordinate or secondary position to the original mortgage and the new loan includes the unpaid balance of the first. ...


What are jumbo loans?

If you borrow at or below the conventional loan limit for non-government mortgages, you have what is known as a "conforming" loan. If the amount surpasses the loan limit that is set by both Fannie Mae and Freddie Mac -now $333,700 for a single-family home - you would then have ...


How do growing equity mortgages work?

Also called GEMs, these fixed-rate mortgages have monthly payments that increase in increments of 3 percent or more to reduce the principal loan amount. They are often written by the lender at a below market interest rate and have shorter terms. ...


What is a balloon mortgage?

It is a mortgage in which the entire unpaid principal becomes due and payable on a given date, five, ten, or any number of years in the future. The borrower must pay up, refinance, or lose the property. ...


Should I consider a “B,” “C,” or “D” paper loan if I have bad credit?

These loans do not meet the borrower credit requirements of "A" or "A-" category conforming loans, so if they are your only option for obtaining a home, then go for it. ...


Are shared equity and shared appreciation mortgages the same?

No. With a shared appreciation mortgage, or SAM, a borrower receives a below-market interest rate in return for the lender receiving a share, usually 30 to 50 percent, in the future appreciation of the property upon its sale. ...


Is equity sharing a good idea?

A shared equity mortgage, or partnership mortgage, can be a good way to purchase a home with little or no money down. In such an arrangement, the borrower/homebuyer has an absentee partner who, as the investor, provides all or some of the down payment. ...


What about a hybrid loan?

Also called a fixed-period ARM, these crossbreed loans combine features of fixed-rate and adjustable-rate mortgages. ...


What is a two step mortgage?

Not to be confused with a biweekly mortgage, this type of home loan is also known as 5/25s and 7/23s. It has one interest rate for part of the life of the mortgage and a different rate for the remainder of the loan. ...


Can I split my mortgage in two and pay biweekly?

The biweekly mortgage has become increasingly popular as more people favor paying off their home loan early and reducing interest charges. ...


What is an assumable mortgage?

It is a mortgage held by the seller that can be taken over by the buyer when a home is sold. Such loans are hard to find because most lenders stopped voluntarily writing them many years ago. Most new assumable loans today are adjustable rate mortgages. ...