Lending Practices

Question 1

Amortized loan

Answer 1

A loan requiring periodic payments that include both interest and partial repayment of principle

Question 2

Balloon loan

Answer 2

Any loan in which the final payment is larger than the preceding payments

Question 3

Conventional loans

Answer 3

Real estate loans that are not insured by the FHA or guaranteed by the VA

Question 4

Equity

Answer 4

The market value of a property less the debt against it

Question 5

FHA

Answer 5

Federal housing administration

Question 6

Impound or reserve account

Answer 6

An account into which the lender places monthly tax and insurance payments

Question 7

Loan origination fee

Answer 7

The expenses a lender incurs in processing a mortgage loan

Question 8

Loan-to-value ratio

Answer 8

A percentage reflecting what a lender will lend divided by the sale price or market value of the property whichever is less

Question 9

Maturity

Answer 9

The end of the life of a loan

Question 10

PITI payment

Answer 10

A loan payment that combines principle, interest, taxes, and insurance

Question 11

PMI

Answer 11

Private mortgage insurance; a private mortgage insurance source to insure lenders against foreclosure loss

Question 12

Point

Answer 12

One percent of the loan amount

Question 13

Principle

Answer 13

The balance owing on a loan

Question 14

UFMIP

Answer 14

Up-front mortgage insurance premium —a one time charge by the FHA for insuring a loan

Question 15

VA

Answer 15

Department of veteran affairs