Flashcards in Mortgage Loan Products and Characteristics Deck (9)
Interest Only Loan
No principal paid
Negatively Amortizing (NegAm) Loan
minimum payment is made but the payment is less than what is necessary to cover the interest expense generated.
Adjustable Rate Mortgage
Interest can vary, therefore the P and I payment can
Fixed Rate Mortgages
P&I payments stay the same over the life of the loan.
Balloon Payment Mortgage
Only partial amortization, meaning that amount of monthly payments due are calculated over a certain term (30 years) but the outstanding principal balance is due at some point short of that term, which is when the outstanding principal amount left on the loan must be paid in full.
First liens that are paid off are the senior, then junior.
Open End & Closed End
Closed End Loan: fully amortizes over a period of time (home equity loan), and an open end loan establishes a credit limit and anticipates multiple transactions within that limit (home equity line of credit)
little risk to lender/investor, priced favorably for borrower. Underwritten by agency guidelines of FNMA, FHLMC, or Government