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Products Flashcards

1
Q

A mortgage where the interest rate remains consistent through the entire life of the loan

A

Fixed rate mortgage

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2
Q

Most common term lengths for fixed rate mortgages

A

10 15 20 25 30

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3
Q

What term is considered a traditional mortgage

A

40 years

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4
Q

A loan in which the interest rate can change over the life of the loan

A

ARM

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5
Q

What is the average amortization schedule length for most arms

A

30 years

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6
Q

What are 3 types of arms

A

Traditional hybrid option

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7
Q

An ARM mortgage where the interest rate adjust on a periodic basis

A

Traditional ARM

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8
Q

A loan that combines the features of a fixed rate mortgage and an adjustable rate mortgage

A

Hybrid ARM

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9
Q

What are the most common hybrid arms

A

3/1 5/1 7/1 10/1

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10
Q

ARM mortgage where the borrower has three different payment options

A

Option ARM

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11
Q

What are the 3 different payment options for an option ARM

A

Fully amortizing
Minimum payment
Interest only

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12
Q

How many years does borrower have option on payment type on option arm mortgage

A

5 years

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13
Q

What is the lenders profit on an ARM

A

Margin

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14
Q

What is dictated by financial marketplace and causes the ARM to adjust

A

Index

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15
Q

What are the 3 most common used index’s

A

SOFR
T-Bill
COFI (11th district)

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16
Q

What is the interest rate at time of closing called

A

Note rate

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17
Q

What document is the note rate listed

A

Promissory note

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18
Q

What is formula for fully indexed rate

A

Margin + Index

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19
Q

What are voluntary limits on an ARM set by the lender called

A

Caps

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20
Q

What are the three different types of caps

A

Initial
Periodic
Lifetime

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21
Q

What is a sudden and severe increase in monthly amount due on mortgage known as

A

Payment shock

22
Q

What is a loan that requires a planned full repayment of balance prior to the end of 30 yr amortization known as

A

Balloon mortgage

23
Q

What are 2 types of balloon mortgages

A

Traditional (30/15)
Reset / conditional refinance (5/25 & 7/23)

24
Q

What are the 4 conditions that must be met to qualify for reset / refinance ballon mortgage

A

P- primary
O- only lien
N- no late payments
D- documents and closing cost paid

25
Q

What type of loan allows for borrower to ease into fully amortizing payment on loan

A

Graduated payment mortgage

26
Q

What is the length of gradual increase period on graduated payment mortgages

A

5-10 years

27
Q

What is an open ended mortgage that allows borrower to use equity on home as a line of credit

28
Q

What type of mortgage allows borrower to tap into equity and use it to support a rate and term refi of current mortgage, take cash out, or as a line of credit

A

Reverse mortgage

29
Q

What are 3 methods of equity conversion with reverse mortgage

A

Lump sum cash out
Term cash out
Line of credit

30
Q

What are 3 types of reverse mortgages

A

Single purpose
Propriety Reverse mortgage
Home equity conversion mortgage (FHA HECM)

31
Q

How old is elderly according to ECOA

32
Q

What are 3 requirements to obtain reverse mortgage

A

62 years
Primary residence
No other liens

33
Q

4 restrictions on reverse mortgage

A

Taxes and insurance paid on time
Property maintained well
Borrower may not rent property
Borrower may not declare bankruptcy

34
Q

What are 3 main characteristics of interim loans

A

12 months or less
Higher interest rates
Interest only payments

35
Q

What document indicates construction is complete and is available for residency

A

CO - certificate of occupancy

36
Q

What type of loan serves as temporary financing for a home buyer when they are still paying a mortgage on their current home

A

Bridge loan

37
Q

What type of product allows borrower to pull equity from their home and receive a one time lump sum payment at closing. Usually set up as a subordinate lien on primary mortgage

38
Q

What type of mortgage provides a loan to cover the down payment in order to avoid PMI

A

Piggyback loan
80/20 or 80/10/10
80/20= 1st lender 80 / 2nd lender 20
80/10/10 = 1st lender 80 / 2nd lender 20 / borrower 10

39
Q

What is it called when a borrower gets a second mortgage to help cover the cost of their down payment

A

Purchase money second mortgage

40
Q

What type of loan is intended for borrowers with less than prime qualifications

A

Sub prime mortgage

41
Q

What is the type of loan where the dollar amount of the mortgage exceeds the conforming loan limit set by the FHFA

A

Jumbo mortgage

42
Q

What type of loan is used for unique circumstances

A

Niche loan
Alt A mortgage is considered a niche loan

43
Q

What type of loan is intended for borrowers who have strong credit but don’t meet all the criteria for a conventional conforming loan

A

Alt A loan

44
Q

What is it called when a lien is lower in rank

A

Subordinate

45
Q

What are the 2 most common types of subordinate liens

A

HELOC and HEL

46
Q

A loan where the borrower is only required to pay the interest portion of their loan and the principal balance is never reduced

A

Interest only loan

47
Q

What is the standard amount of time a borrower is able to make interest only payments on an interest only loan

A

5-10 years

48
Q

A loan where borrower receives a mortgage without full documentation to support application

A

Reduced documentation loan

49
Q

What are 4 types of reduced documentation loans

A

NINA- no income no assets
SISA- stated income stated assets
NIVA- no income verified assets
SIVA- stated income verified assets

50
Q

What are 2 types of loans that have negative amortization

A

Reverse mortgages
Graduated payment mortgages (GPM)

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