Chapter 13 keywords

Question 1

Adjustable rate mortgage ARM

Answer 1

And adjustable rate mortgage. RM is an amortized loan, in which the interest rate fluctuates over the term of the loan payment adjustments are made. At intervals. The lenders risk associated with making fixed rate loans is reduced by using an adjustable rate mortgage.

Question 2

Amortized mortgage

Answer 2

An amortized mortgage is alone with scheduled. Periodic payments were the loan payments typically included portion that applies to the interest owed, and a portion that goes toward repaying the loan called principal.

Question 3

Balloon payment

Answer 3

Balloon payment is when the principal amount borrowed is paid in the lump sum payment at the end of the term. the amount of a balloon payment must be stated in the mortgage 

Question 4

Biweekly mortgage

Answer 4

A biweekly mortgage requires that 1/2 of the mortgage payment be paid every two weeks instead of one payment per month. This is the same as making 13 monthly payments each year and reduces the time necessary to amortize the loan.

Question 5

Conforming loans

Answer 5

Fannie may and Freddie Mac and encouraged the standardization of lending practices throughout the United states. All loans intended to be sold to either Fannie Mae or Freddie Mac must be under any use criteria and centers establish by these organizations. Loans that are underwritten in accordance with their requirements are called conforming loans, and the lenders that originate them are referred to as conforming lenders. loans that do not conform to their standards for underwriting cannot be sold in the secondary market and must be held by the primary lender as a portfolio loan 

Question 6

Conventional mortgage loans

Answer 6

A conventional mortgage loan is any loan that is not insured or guaranteed by an agency of the government. Conventional mortgage loans made by lending institutions and private lenders are the predominant method in which single-family residences are financed

Question 7

Disintermediation

Answer 7

Disintermediation occurs when depositors by past traditional depository institutions and withdraw from accounts with low fixed interest rates, transferring those funds to alternative investments with higher interest rates, such as the stock market, mutual funds, artwork, and so on. Large scale disintermediation can reduce the mortgage, money supply and cause interest rate to rise

Question 8

Home equity conversion, mortgage HECM

Answer 8

The most popular reverse mortgage program is the FHA home equity conversion mortgage, HECM, for seniors, who are age 62 or older and own their property at Wright or have paid down a considerable amount 

Question 9

Home equity loan

Answer 9

A home equity loan is secured by the equity in the home, and creates a lien on the borrowers home, which should use the overall equity. If the borrower defaults, the lender may foreclose on the home.

Question 10

Index

Answer 10

The index is a foundation rate for the loan that must be published and is beyond the control of the lender. To index rates often used by lenders are the weekly average yield on US treasury securities called the one year T bill rate and the 11th district cost of fundsof the two, the 11th district cost of funds tends to be less volatile, thereby resulted less dramatic changes in the borrowers payment

Question 11

Intermediation

Answer 11

Intermediation is the term used to describe the flow of deposits into land institutions, thereby a mortgage money supply. One individuals, deposit funds into banks, savings and loan, associations, and credit unions, the money becomes available for lending purposes. It follows that high levels of intermediation increased. The mortgage money supply and interest rates are typically reduced.

Question 12

Level payment plan

Answer 12

If the monthly mortgage payment remains the same over the term of the loan, the loan is a fixed rate rate or level payment loan. In each succeeded monthly payment, the amount applied to pay interest on the loan is reduced, and the amount applied to repay. The loan principle is increased. The principal amount amount originally borrowed will be completely repaid at the end of the loan term.

Question 13

Lifetime cap

Answer 13

Lifetime Cap said the upper and lower interest that can be charged over the life of the loan. Interest rate caps are another way of protecting the borrower from sharp increases in interest rates.

Question 14

Margin

Answer 14

A margin is a present that is added to the index rate by the lender to cover the lender is overhead and provide a profit on the loan. The margin does not change for the life of the loan.

Question 15

Mortgage broker

Answer 15

Mortgage broker is an individual who conduct loan originator activities through one or more licensed MLOs. The MLOs maybe employed by the mortgage broker or work as independent contractors to the mortgage broker.
The mortgage broker must be licensed by the Florida office of financial regulation

Question 16

Mortgage fraud

Answer 16

According to the government, financial fraud enforcement, task force, traditional mortgage fraud, include situations in which homebuyers and/or lenders falsify information to obtain a home loan. The personal and financial loss associated with mortgage fraud as a concern for consumers, financial institutions, and law enforcement.

Question 17

FHA mortgage insurance premiums MIP

Answer 17

AnFHA mortgage insurance premium MIP is required for all FHA insured mortgage loans, regardless of the down payment. This is not the same as private mortgage insurance PMI charged for conventional loans.

Question 18

A mortgage loan originator MLO

Answer 18

A mortgage loan originator MLO is an individual, who takes residential mortgage, loan applications, or offers or negotiate terms of a residential mortgage loan for compensation. MLO’s do not make loans. They arrange loans by taking mortgage applications and searching for lenders who offer the lowest interest rates and easiest barber qualification.

Question 19

Negative amortization

Answer 19

Negative amortization occurs when loan payments failed to cover the interest, and the remaining amount of interest is added to the loans principle. Negative memorization increases the loan balance, which causes the borrower to owe more money.

Question 20

Non-conforming loans

Answer 20

A non-conforming loan is a loan offer to borrowers who do not qualify to conforming loans. These loans typically have higher interest, interest rates and make care additional upfront fees and insurance requirements. These loans are offered by portfolio, mortgage lenders, correspondent, mortgage, lenders, or private investors through a mortgage broker.

Question 21

Partially amortized/balloon payment mortgage

Answer 21

Some prioritizing loans are partially amortized, which means the payment is not sufficient to pay all the interest due and repay the loan in full. Refer to as a balloon payment mortgage, the balance of the original loan remained unpaid at the end of a partially amortizing loan term is called a balloon payment. Other amortizing loans may be instructed so that a balloon payment is due after a certain number of years, such as five or seven years.

Question 22

Payment cap

Answer 22

Payment caps ser the limit for any single adjustment to the payment amount. For example, with a 7% payment cap, a payment of $100 could increase to no more than a 107 in the first adjustment period and to no more than 114.49 in the second adjustment.

Question 23

Periodic cap

Answer 23

A periodic cap, or periodic rate, cap, limits how much the rate can change at one time. Periodic cap are usually annual caps, or caps that prevent the rate from rise, and more than a certain number of percentage points in any given year.

Question 24

Purchase money, mortgage PMM

Answer 24

Purchase money mortgage PMM is any mortgage loan obtained from the seller when the proceeds of the loan are used to purchase your property. Also referred to as seller financing, a PMM is typically used in situations where the buyer cannot qualify for a mortgage through other London channels.

Question 25

Reverse mortgage

Answer 25

It is usually for 64 years old and older.
The Florida home equity conversion act of 1988 was passed by the Florida legislature to assist homeowners who are 62 years older of age or older. A reverse mortgage also called a reverse equity mortgage or reverse annuity mortgage, allows a homeowner to receive a lump up or a monthly advance on a line of credit based on the equity in their home.

Question 26

Teaser rate

Answer 26

A teaser rate is an initial interest rate there is stated in the promissory note that is lower than the fully index rate. It’s the rate is intended to encourage mortgage loan borrowers to obtain an ARM instead of a fixed rate loan. Teaser rate usually apply only to the first year of the loan.

Question 27

Upfront mortgage insurance, premium UFMIP

Answer 27

UFMIP is paid at the time of closing of the loan, although all or a portion of the mortgage insurance premium may be financed. The UFMIP is 1.75% of the mortgage amount in the most cases. If Biden catch a closing, the UFMIp can be paid by the borrower, seller, or third-party