Appraisals and the Appraisal Process

This set of flashcards covers key concepts related to appraisals, mortgage financing, and valuation techniques.

Market Value

The most probable selling price of a property, assuming a normal market.

Investment Value

The value an investor places on a property.

Transaction Prices

Historical selling prices and estimates of current selling prices based on properties in the area.

USPAP Process

The process followed in appraisals to identify problems, determine scope, collect data, analyze it, and determine land value.

Highest and Best Use

The most profitable legal use of land, taking into account legal permissibility, physical possibility, financial feasibility, and maximum productivity.

Reconciliation of Valuations

The process of determining which valuation method is the most appropriate, instead of simply averaging them.

Mortgage

A security agreement for a loan, where the home serves as collateral.

Adjustable Rate Mortgage (ARM)

A type of mortgage with an interest rate that can change based on a specified index.

Escrow

An arrangement in which a third party holds funds or documents until certain conditions are met.

Acceleration Clause

A contract provision that allows the lender to demand payment of the entire loan amount upon default.

Community Reinvestment Act (CRA)

Legislation aimed at encouraging banks to increase lending to lower-income borrowers.

Conforming Loan

A mortgage that meets the standards set by FNMA and GNMA.

PMI

Private Mortgage Insurance, which protects the lender in case the borrower defaults on the loan.

Reverse Annuity Mortgage (RAM)

A type of mortgage where the homeowner receives payments from the lender, increasing the mortgage balance.

Loan-to-Value (LTV) Ratio

A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Discount Points

Fees paid to reduce the interest rate on a mortgage, calculated as a percentage of the loan amount.