#1
What is a fixed-rate mortgage?
A mortgage where the interest rate remains the same for the entire term of the loan
ExplanationStable interest rate throughout the loan duration
#2
What is an adjustable-rate mortgage (ARM)?
A mortgage where the interest rate adjusts periodically based on market conditions
ExplanationInterest rate changes with market conditions
#3
What is the typical loan term for a mortgage?
30 years
ExplanationStandard mortgage duration
#4
What is private mortgage insurance (PMI)?
Insurance protecting the lender in case of default by the borrower
ExplanationLender protection against borrower default
#5
What is a jumbo mortgage?
A mortgage that exceeds the loan limits set by government-sponsored enterprises
ExplanationLarge mortgage exceeding government limits
#6
What is a balloon mortgage?
A mortgage where the borrower makes small monthly payments initially and a large payment at the end
ExplanationInitial small payments followed by a large final payment
#7
What is a reverse mortgage?
A mortgage where the lender makes payments to the borrower
ExplanationLender provides payments to the borrower
#8
What is a cash-out refinance?
Refinancing to borrow more than the outstanding mortgage balance
ExplanationRefinancing for additional funds beyond current mortgage
#9
What is a recourse mortgage?
A mortgage where the lender has no recourse to the borrower's other assets if they default
ExplanationLender can't seize other assets upon default
#10
What is a non-recourse mortgage?
A mortgage where the lender has no recourse to the borrower's other assets if they default
ExplanationLender can't seize other assets upon default
#11
What is a buy-to-let mortgage?
A mortgage for purchasing property to rent out
ExplanationMortgage for investment properties rented out
#12
What is a wraparound mortgage?
A mortgage where the lender assumes the seller's existing mortgage
ExplanationNew mortgage wraps around existing one
#13
What is the debt-to-income ratio (DTI) in the context of mortgages?
The ratio of the borrower's income to their total debt payments
ExplanationBorrower's income versus total debt payments