ROAGE MINDIAP Ch 05: Assignment - Making Automobile and Housing Decisions Term Answer Description Loan-to-value ratio A. This insurance policy protects the mortgage lender from a default by its mortgage borrower, and it is typically required when the borrower uses a down payment that is less than 20%. Mortgage points B. This refers to the process in which a lender seizes and sells a property, because the borrower cannot make the scheduled principal and interest payments. Closing costs This is a form of direct ownership of an individual unit in a multlunit project in which common areas and facilities, such as the lobbies, recreational areas, and facilities, are owned by all property owners in the project. Foreclosure D. This refers to the clause in a real estate sales contract that makes the agreement conditional on one or more factors or events, such as the availability of financing or the results of a property inspection. Short sale E. This occurs when the value of the real estate asset is lower than the loan amount due on that asset. Condominium F. This is the general name given to the expenses that a borrower pays when his or her mortgage loan is closed, the funds are paid to the seller, and the buyer receives title to the purchased property. Private mortgage Insurance G. This term describes the process through which an asset, not owned by the seller, is sold at a price lower than debt balance owed on the property. Earnest money deposit H. This is the general name given to fees paid by a borrower where one point is equal to 1% of the amount borrowed. Negative equity This is the money pledged by a potential house buyer to show his or her good faith when making an offer. Contingency clause 3. This is a term used by financial lenders defined as the ratio of the loan underwritten to the value of the property in consideration