Chapter 12 Flashcards
What is the Federal Reserve System?
The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
What is Interest Rate?
The percentage of a sum of money charged for its use. Rent or charge paid for use of money, expressed as a percentage per month or year of the sum borrowed.
What are Discount Points?
The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate.
What is Fannie Mae?
An acronym nickname for Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and conventional mortgages.
What is Freddie Mack?
A nickname for Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and conventional mortgages.
What is Ginnie Mae?
a nickname for Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages.
What is a Conventional Loan?
A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.
What is a Loan to Value Ratio?
The relationship between the amount of a mortgage loan and the lender’s opinion of the value of the property pledged to secure payment of the loan.
What is Private Mortgage Insurance?
Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI).
What is an FHA-Insured Loan?
A mortgage loan in which payments are insured by the Federal Housing Administration.
What is a construction loan?
A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.
What is a Fixed Interest Mortgage?
A mortgage in which the interest does not change.
What is an Adjustable Rate Mortgage?
A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
What is a Reverse Annuity Mortgage?
Used by older people who need additional income and want to take advantage of the equity in their homes.
