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Flashcards in Mortgage Loan Products and Characteristics Deck (9)
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1

Interest Only Loan

No principal paid

2

Negatively Amortizing (NegAm) Loan

minimum payment is made but the payment is less than what is necessary to cover the interest expense generated.

3

Adjustable Rate Mortgage

Interest can vary, therefore the P and I payment can

4

Fixed Rate Mortgages

P&I payments stay the same over the life of the loan.

5

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.

6

Senior/Junior Liens

First liens that are paid off are the senior, then junior.

7

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)

8

Prime Loans

little risk to lender/investor, priced favorably for borrower. Underwritten by agency guidelines of FNMA, FHLMC, or Government

9

Finance Charge

Interest expenses and other closing costs the borrower will pay as a cost or an expense over the term of the loan.