#1
What is a mortgage?
A loan for purchasing real estate
ExplanationMortgage is a loan used to buy property.
#2
What does LTV stand for in real estate financing?
Loan to Value
ExplanationLTV is the ratio of loan amount to property value.
#3
What is a down payment in real estate?
An initial payment made towards the purchase price of a property
ExplanationDown payment is the upfront property purchase payment.
#4
What is the purpose of private mortgage insurance (PMI)?
To protect lenders in case the borrower defaults on the loan
ExplanationPMI safeguards lenders from borrower default risk.
#5
What is the Debt-to-Income (DTI) ratio used for in real estate financing?
To determine the amount of money a borrower can afford to borrow
ExplanationDTI ratio gauges borrower's borrowing capacity.
#6
What is a foreclosure?
A legal process where a lender takes possession of a property
ExplanationForeclosure is the legal takeover of a property by a lender.
#7
What is the difference between a mortgage broker and a mortgage lender?
A mortgage broker acts as an intermediary between borrowers and lenders, while a mortgage lender provides the funds directly to borrowers.
ExplanationBroker mediates, lender directly funds mortgages.
#8
What is a home equity loan?
A loan taken out against the equity of a home.
ExplanationHome equity loan borrows against property's value.
#9
What is the role of an underwriter in the mortgage approval process?
To analyze the borrower's financial situation and assess risk.
ExplanationUnderwriter evaluates borrower's financials and risk.
#10
What is the difference between a conventional mortgage and an FHA loan?
FHA loans are insured by the Federal Housing Administration, while conventional mortgages are not.
ExplanationFHA insured, conventional not.
#11
What is an amortization schedule?
A document outlining the payment history of a mortgage
ExplanationAmortization schedule shows mortgage payment details over time.
#12
What is the purpose of a title search in real estate?
To verify the legal ownership of a property
ExplanationTitle search confirms property ownership legality.
#13
What is a balloon mortgage?
A mortgage that requires a large final payment
ExplanationBalloon mortgage entails a significant final payment.
#14
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
The interest rate structure
ExplanationFixed-rate has constant interest, while ARM fluctuates.
#15
What is a real estate escrow?
A financial account to hold funds during a transaction
ExplanationEscrow holds funds securely during a real estate transaction.
#16
What does the term 'points' refer to in real estate financing?
Fees paid to lenders at closing in exchange for a lower interest rate
ExplanationPoints are fees for a lower interest rate at closing.
#17
What does PITI stand for in real estate?
Principal, Interest, Taxes, Insurance
ExplanationPITI includes major components of a mortgage payment.
#18
What is the purpose of a home inspection in the real estate buying process?
To evaluate the property's condition and identify any potential issues.
ExplanationHome inspection assesses property condition.
#19
What is the purpose of a home appraisal in the mortgage process?
To determine the property's market value for lending purposes.
ExplanationAppraisal establishes property value for lending.
#20
What is a reverse mortgage?
A type of mortgage where homeowners receive payments from the lender rather than making payments to the lender.
ExplanationReverse mortgage provides payments to homeowners.
#21
What is a prepayment penalty?
A fee charged for paying off a mortgage before the end of its term
ExplanationPrepayment penalty is a charge for early mortgage payoff.
#22
What is a real estate appraisal?
An evaluation of a property's market value
ExplanationAppraisal assesses a property's market value.
#23
What is the role of a title company in a real estate transaction?
To conduct a title search and issue title insurance
ExplanationTitle company ensures property title validity.
#24
What is a jumbo mortgage?
A mortgage that exceeds the conforming loan limits set by government-sponsored enterprises.
ExplanationJumbo mortgage exceeds government loan limits.
#25
What is the purpose of a deed in a real estate transaction?
To transfer ownership of the property from seller to buyer.
ExplanationDeed transfers property ownership from seller to buyer.