Ch 7 Loan Types, Terms And Issues Flashcards
What is the formula to calculate interest?
I = PRT
Semi annual equals
Six months
Yearly equals
12 months
Quarterly equals
Four times a year
1 Quarter =
Three months
The term house payment typically includes
A monthly payment of 1/12 of the annual taxes, homeowners insurance and mortgage insurance if any
What are points?
Percentage points based on the loan amount
1 point equals
1% of the loan amount
Discount points are pre-pay interest, and are usually paid when?
At closing
What does amortized mean?
Paid in full
In a fixed rate mortgage, the monthly payment is referred to as
P&I - principal and interest
True or false: in a fixed rate mortgage, as the loan is repaid, the balance of the loan is reduced overtime until it is fully amortize
True
What does the index allow?
The rate to move up and down with fluctuations in the financial markets
What allows the lender to offer lower interest rate during the first year or more on the loan as an incentive to attract borrowers?
A teaser rate or discounted initial rate
What does ARM stand for?
Adjustable rate mortgage