Chapter 6: Nontraditional/ Nonconforming Loans & Financing Flashcards
jumbo loans
exceed the maximum loan amount established by Fannie Mae and Freddie Mac for conforming mortgage loans.
Alt-A loans
loans that hold borrowers with good credit to different documentation standards than traditional loans.
A-minus loans
are for borrowers with credit record blemishes, such as being 30 days late one or two times over the past year, having limited funds for a down payment, a high debt-to-income ratio, or a record of bankruptcy and/or foreclosure.
non-traditional mortgage products
anything other than 30- year fixed rate loans. mortgage products that allow borrowers to defer principal and, sometimes, interest.
buydown
additional money (discount points) paid to the lender at the start of a loan to lower the interest rate and payments. permanent or temporary. the lowest rate a buyer can qualify for is 2% below market rate. must qualify at note rate.
ARM
Adjustable Rate Mortgage. have interest rates that may adjust up or down, according to the terms of the note. There are caps.
index
statistical report reflecting the cost of money
margin
spread
fully indexed rate
Margin + Index
conversion option
allow buyers to convert to a fixed rate
IPC
interested party contributions. anyone other than the buyer who has a financial interest in, or can influence the terms and the sale or transfer of, the subject property. FHA = 6% Max
Construction Mortgage
Temporary. fixed disbursement plan, voucher system, and warrant system
Reverse Mortgage
62 or older. monthly payment, a lump sum of cash, or a line of credit, based on the equity in their homes. borrower dies, moves out of the house for 12 consecutive months, or sells the house trigger repayment.
HECM
Home Equity Conversion Mortgage. most popular reverse mortgage program through FHA.
HECM up-front mortgage insurance
2% of MCA. maximum claim amount. Annual MIP is 0.5%.
