#1
What does LTV stand for in mortgage?
Loan-to-Value
ExplanationIt represents the ratio of the property's value to the mortgage amount.
#2
What is the role of a mortgage broker?
To assist borrowers in finding and securing mortgage loans from lenders
ExplanationMortgage brokers help borrowers connect with lenders and secure suitable mortgage loans.
#3
What is a mortgage default?
A situation where the borrower fails to make mortgage payments as agreed
ExplanationIt occurs when the borrower doesn't make mortgage payments according to the agreement.
#4
Which of the following factors affects mortgage interest rates?
All of the above
ExplanationVarious factors, including credit score, economic conditions, and loan type, collectively impact mortgage rates.
#5
What is Private Mortgage Insurance (PMI)?
Insurance that protects the lender if the borrower defaults on the loan
ExplanationPMI safeguards the lender in case the borrower fails to repay the mortgage.
#6
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
Fixed-rate mortgage has a fixed interest rate throughout the loan term while ARM has a fluctuating interest rate.
ExplanationA fixed-rate mortgage maintains a constant interest rate, whereas an ARM's rate varies.
#7
What is a prepayment penalty in a mortgage?
A fee charged if the borrower pays off the mortgage before a specified period
ExplanationIt's a fee imposed when the borrower repays the mortgage earlier than agreed upon.
#8
What is a home equity loan?
A loan where the borrower uses the equity in their home as collateral
ExplanationIt's a loan where the borrower leverages their home equity as collateral for the loan.
#9
What is a mortgage refinance?
A process of obtaining a new mortgage to replace an existing one
ExplanationIt involves acquiring a new mortgage to replace an existing one, often to secure better terms.
#10
What is an amortization schedule in the context of a mortgage?
A schedule showing the breakdown of payments into principal and interest over the life of the loan
ExplanationIt outlines how mortgage payments are allocated between paying off the loan principal and interest.
#11
What is a jumbo mortgage?
A mortgage for a luxury property that exceeds the conforming loan limits
ExplanationIt's a mortgage for high-value properties exceeding standard loan limits.
#12
What is the debt-to-income ratio in mortgage lending?
The ratio of the borrower's monthly debt payments to their gross monthly income
ExplanationIt calculates the proportion of a borrower's income dedicated to monthly debt payments.
#13
What is a balloon mortgage?
A mortgage that requires a large balloon payment at the end of the loan term
ExplanationIt necessitates a substantial final payment at the conclusion of the mortgage term.
#14
What is a reverse mortgage?
A mortgage where the lender makes payments to the borrower, typically for senior homeowners.
ExplanationIn a reverse mortgage, lenders make payments to senior homeowners.
#15
What is a mortgage points system?
A system where borrowers pay upfront fees to lower the interest rate on their mortgage.
ExplanationIt involves paying upfront fees to reduce the interest rate on a mortgage.