Conventional Loans

Question 1

What are the 5 advantages of conventional loans over govt’-backed loans?

Answer 1

They are processed more quickly. Have fewer forms and are more flexible. There is no legal limit on loan amounts. Borrowers can seek out other lenders in case of refusal. Conventional lenders are more flexible

Question 2

What are the 2 disadvantages of conventional loans?

Answer 2

Higher down payments. Loans carry prepayment penalties

Question 3

What is the most common type of loan that is generally viewed as more secure?

Answer 3

Conventional mortgage

Question 4

Most conventional loans require the borrower to make a down payment of _% or more, making the loan _% or less of the property’s sale price

Answer 4

20%, 80%

Question 5

Are conventional loans insured?

Answer 5

No

Question 6

What kind of loans are conventional loans traditionally designed as?

Answer 6

Fixed-rate loans

Question 7

What happens with the monthly payments for interest and principal in a fixed-rate loan?

Answer 7

They never change

Question 8

What 2 distinct features do Fixed-mortgage rate loans have?

Answer 8

1. The interest rate remains fixed for the life of the loan. 2. The payments remain level for the life of the loan and are structured to repay the loan at the end of the term

Question 9

What does PMI stand for?>

Answer 9

Private mortgage insurance program

Question 10

What does a PMI do?

Answer 10

Insures the top 30% of a loan, protecting the lender in case the borrower defaults on the loan

Question 11

When do PMI payments terminate?

Answer 11

Once the loan has been repaid to a certain level