#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
#14
What is mortgage amortization?
The process of paying off a mortgage over time through regular payments
ExplanationGradual repayment of mortgage through regular payments
#15
What is the difference between a mortgage broker and a loan officer?
A mortgage broker works independently, while a loan officer is employed by a lender
ExplanationBroker operates independently, loan officer works for a lender
#16
What is a collateralized mortgage obligation (CMO)?
A type of mortgage-backed security with multiple classes of bonds
ExplanationComplex mortgage-backed security with bond classes
#17
What is a graduated payment mortgage (GPM)?
A mortgage where payments start low and gradually increase over a few years
ExplanationPayments start low, increase over time
#18
What is a mortgage-backed security (MBS)?
A security backed by a pool of mortgages
ExplanationSecurity backed by pooled mortgages
#19
What is a prepayment penalty?
A fee charged for paying off a mortgage early
ExplanationFee for early mortgage payoff
#20
What is mortgage insurance premium (MIP)?
Insurance protecting the lender against default
ExplanationLender protection against default
#21
What is the debt service coverage ratio (DSCR) in the context of commercial mortgages?
The ratio of the property's net operating income to its debt payments
ExplanationIncome ratio to property's debt payments
#22
What is a mortgage originator?
A person or company that assists borrowers in obtaining mortgage loans
ExplanationAssists borrowers in obtaining mortgages
#23
What is a mortgage servicer?
A person or company that collects mortgage payments and manages borrowers' escrow accounts
ExplanationManages mortgage payments and escrow accounts
#24
What is a deed in lieu of foreclosure?
A legal document granting ownership of a property to the lender to avoid foreclosure
ExplanationTransfers property ownership to lender to prevent foreclosure
#25
What is a mortgage escrow account?
An account where the lender holds funds to cover property taxes and insurance
ExplanationFunds held for property taxes and insurance