Real Estate Financing and Loan Regulations Quiz

Amortization refers to the process of paying off a loan over time through regular payments, which include both principal and interest.

The Loan Estimate form provides borrowers with important information about a mortgage loan, including estimated interest rate, monthly payment, and total closing costs.

LTC ratio is used by lenders to assess the risk of a loan by comparing the loan amount to the total cost of the property being purchased.

HMDA requires financial institutions to disclose information about their mortgage lending practices, including the number and types of loans they originate, to promote transparency and fair lending practices.

A recourse loan is a type of loan where the lender can seize the collateral and pursue the borrower's other assets in case of default, providing the lender with additional protection against default.

HUD oversees the Federal Housing Administration (FHA) and sets standards for residential real estate loans to promote affordable housing and community development.

LTV ratio is used by lenders to determine the risk of a loan by comparing the amount of the loan to the appraised value of the property.

TISA requires financial institutions to provide clear and accurate information about savings account terms and conditions to consumers.

Points are fees paid to a lender at closing in exchange for a lower interest rate on a mortgage loan.

FHA insures loans made by approved lenders, which allows lenders to offer loans to borrowers who might not qualify for conventional loans.

A balloon mortgage is a type of loan that requires borrowers to make regular monthly payments for a certain period, followed by a large final payment.

PMI is insurance that lenders require borrowers to purchase to protect the lender in case the borrower defaults on the loan.

Insured mortgages are loans that are backed by a government agency, such as the FHA or VA, which insures the loan in case of borrower default.

Fannie Mae purchases and guarantees mortgages from lenders, which helps to provide liquidity in the housing market and encourages lenders to offer more mortgages.

ECOA prohibits lenders from discriminating against borrowers based on certain characteristics and requires lenders to provide equal access to credit for all borrowers.

Subprime mortgages are loans offered to borrowers with poor credit history, typically at a higher interest rate to compensate for the higher risk of default.

Construction loans are short-term loans used to finance the construction of a new building or development, typically converted into a long-term mortgage after construction is complete.