Terms 2

Question 0

When real estate is financed with terms or financing concessions other than those typical for conventional loans

Answer 0

Alternative financing

Question 1

Loans in rural areas for households at or below 80% of the adjusted median income level

Answer 1

Agricultural loans

Question 2

When a loan balance decreases because of periodic installments that pay principal and interest.

Answer 2

Amortization

Question 3

Relationship between the cost of borrowing and the total amount financed, represented as a percentage.

Answer 3

Annual percentage rate (APR)

Question 4

When points are paid to reduce the buyers interest rate

Answer 4

Buydowns

Question 5

When points are paid to a lender to reduce the interest rate and loan payments for the entire life of the loan.

Answer 5

Permanent buydowns

Question 6

For home sport with FHA/HUD guarantees, a ______ _______Form is used to document and appraiser’s estimate of the value of the property to be purchased.

Answer 6

Conditional commitment

Question 7

Financial institutions that are a type of cooperative organization we members share something in common i.e. an employer, pool their deposits together, and pay members better interest rates, and loan money to fellow members.

Answer 7

Credit unions

Question 8

Paying 1% of the loan amount to reduce the borrowers monthly payments or interest rate.

Answer 8

Discount points

Question 9

A contract between a buyer client and a mortgage broker that creates an agency relationship and indicates the fee the client will pay for the broker services.

Answer 9

Fee agreement

Question 10

Financial institutions that specialize in making high-risk loans and higher interest rates.
(sources of secondary mortgages and home-equity loans)

Answer 10

Finance companies

Question 11

A statistical report that is a generally reliable indicator of the approximate change in the cost of money.

Answer 11

Index

Question 12

This is a charge for the use of money.

Answer 12

Interest

Question 13

A limit placed on the number of percentage points and interest-rate can be increased during the term of the loan

Answer 13

Interest rate cap

Question 14

Loans that exceed the maximum loan that Fannie Mae/Freddie Mac will buy (currently $300,700 on a single-family home) making them nonconforming loans.

Answer 14

Jumbo loans

Question 15

The cash rebate paid to a mortgage broker based on selling an interest rate above the rate that the borrower qualifies for. Also known as a Yield Spread Premium (YSP)

Answer 15

Lender’s rebate

Question 16

When the lender sells a mortgage loan it to the secondary mortgage market.

Answer 16

Loan assignment

Question 17

A buydown plan where the interest reduction rate/the payment is constant throughout The buydown period.

Answer 17

Level payment

Question 18

A general term to describe a mortgage that can be prepaid at any time without penalty

Answer 18

Open mortgage

Question 19

State-chartered banks, mostly in North East US, owned by depositors and operated for their benefit. (Usually a large portion of their assets are mortgages.)

Answer 19

Mutual savings banks

Question 20

Financial institutions that make real estate loans that they keep and service in house instead of selling to the secondary markets

Answer 20

Portfolio lenders

Question 21

This is the base amount of a loan.

Answer 21

Principal

Question 22

A limit on the amount of mortgage payment increase that can occur within adjustable rate mortgage.

Answer 22

Payment Cap

Question 23

The process of collecting loan payments, keeping records, and handing defaults

Answer 23

Servicing

Question 24

Loans with more risks and higher interest rates over by some lenders to borrowers with questionable credit histories

Answer 24

Subprime loans

Question 25

A bond purchases by an employer to cover employees are trusted with sums of money who are responsible for protecting valuable assets.

Answer 25

Surety bond

Question 26

The process a lender goes through to determine if a borrower or property can qualify for a loan.

Answer 26

Underwriting

Question 27

Even though the payment stays the same for the life of the loan, the amount applied to principle and amount applied interest are just that each month. If all payments are made on time, The loan will be paid off in full with the last scheduled payment.

Answer 27

Liquidating

Question 28

The total payments over the life of the loan will pay off the entire balance of principal and interest due at the end of the term.

Answer 28

Fully amortized loan

Question 29

Private mortgage insurance (PMI) is required for:

Answer 29

90% conventional loans

Question 30

A contract clause that gives the lender certain stated rights when there’s a transfer of ownership in the property. Upon sale of, or even a transfer of, significant interest in the property, the lender will have the right to accelerate the debt, change the interest-rate, or charge a hefty assumption fee.

Answer 30

Alienation clause

Question 31

Paying discount points to decrease the borrower’s interest rate

Answer 31

Buydown

Question 32

The difference between the index value and the interest rate charged to the borrower. In essence this is the lenders gross profit that must also be used to cover the lenders expenses.

Answer 32

Margin

Question 33

Intervals at which a borrower’s interest-rate is adjusted.

Answer 33

Rate adjustment Period

Question 34

This is the difference between the index value and the interest rate charged to the borrower

Answer 34

Margin