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1
Q

A mortgage where the interest rate remains consistent through the entire life of the loan

A

Fixed rate mortgage

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2
Q

Most common term lengths for fixed rate mortgages

A

10 15 20 25 30

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3
Q

What term is considered a traditional mortgage

A

40 years

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4
Q

A loan in which the interest rate can change over the life of the loan

A

ARM

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5
Q

What is the average amortization schedule length for most arms

A

30 years

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6
Q

What are 3 types of arms

A

Traditional hybrid option

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7
Q

An ARM mortgage where the interest rate adjust on a periodic basis

A

Traditional ARM

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8
Q

A loan that combines the features of a fixed rate mortgage and an adjustable rate mortgage

A

Hybrid ARM

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9
Q

What are the most common hybrid arms

A

3/1 5/1 7/1 10/1

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10
Q

ARM mortgage where the borrower has three different payment options

A

Option ARM

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11
Q

What are the 3 different payment options for an option ARM

A

Fully amortizing
Minimum payment
Interest only

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12
Q

How many years does borrower have option on payment type on option arm mortgage

A

5 years

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13
Q

What is the lenders profit on an ARM

A

Margin

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14
Q

What is dictated by financial marketplace and causes the ARM to adjust

A

Index

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15
Q

What are the 3 most common used index’s

A

SOFR
T-Bill
COFI (11th district)

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16
Q

What is the interest rate at time of closing called

A

Note rate

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17
Q

What document is the note rate listed

A

Promissory note

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18
Q

What is formula for fully indexed rate

A

Margin + Index

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19
Q

What are voluntary limits on an ARM set by the lender called

A

Caps

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20
Q

What are the three different types of caps

A

Initial
Periodic
Lifetime

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21
Q

What is a sudden and severe increase in monthly amount due on mortgage known as

Study These Flashcards
A

Payment shock

22
Q

What is a loan that requires a planned full repayment of balance prior to the end of 30 yr amortization known as

Study These Flashcards
A

Balloon mortgage

23
Q

What are 2 types of balloon mortgages

Study These Flashcards
A

Traditional (30/15)
Reset / conditional refinance (5/25 & 7/23)

24
Q

What are the 4 conditions that must be met to qualify for reset / refinance ballon mortgage

Study These Flashcards
A

P- primary
O- only lien
N- no late payments
D- documents and closing cost paid

25
What type of loan allows for borrower to ease into fully amortizing payment on loan
Graduated payment mortgage
26
What is the length of gradual increase period on graduated payment mortgages
5-10 years
27
What is an open ended mortgage that allows borrower to use equity on home as a line of credit
HELOC
28
What type of mortgage allows borrower to tap into equity and use it to support a rate and term refi of current mortgage, take cash out, or as a line of credit
Reverse mortgage
29
What are 3 methods of equity conversion with reverse mortgage
Lump sum cash out Term cash out Line of credit
30
What are 3 types of reverse mortgages
Single purpose Propriety Reverse mortgage Home equity conversion mortgage (FHA HECM)
31
How old is elderly according to ECOA
62
32
What are 3 requirements to obtain reverse mortgage
62 years Primary residence No other liens
33
4 restrictions on reverse mortgage
Taxes and insurance paid on time Property maintained well Borrower may not rent property Borrower may not declare bankruptcy
34
What are 3 main characteristics of interim loans
12 months or less Higher interest rates Interest only payments
35
What document indicates construction is complete and is available for residency
CO - certificate of occupancy
36
What type of loan serves as temporary financing for a home buyer when they are still paying a mortgage on their current home
Bridge loan
37
What type of product allows borrower to pull equity from their home and receive a one time lump sum payment at closing. Usually set up as a subordinate lien on primary mortgage
HEL
38
What type of mortgage provides a loan to cover the down payment in order to avoid PMI
Piggyback loan 80/20 or 80/10/10 80/20= 1st lender 80 / 2nd lender 20 80/10/10 = 1st lender 80 / 2nd lender 20 / borrower 10
39
What is it called when a borrower gets a second mortgage to help cover the cost of their down payment
Purchase money second mortgage
40
What type of loan is intended for borrowers with less than prime qualifications
Sub prime mortgage
41
What is the type of loan where the dollar amount of the mortgage exceeds the conforming loan limit set by the FHFA
Jumbo mortgage
42
What type of loan is used for unique circumstances
Niche loan Alt A mortgage is considered a niche loan
43
What type of loan is intended for borrowers who have strong credit but don’t meet all the criteria for a conventional conforming loan
Alt A loan
44
What is it called when a lien is lower in rank
Subordinate
45
What are the 2 most common types of subordinate liens
HELOC and HEL
46
A loan where the borrower is only required to pay the interest portion of their loan and the principal balance is never reduced
Interest only loan
47
What is the standard amount of time a borrower is able to make interest only payments on an interest only loan
5-10 years
48
A loan where borrower receives a mortgage without full documentation to support application
Reduced documentation loan
49
What are 4 types of reduced documentation loans
NINA- no income no assets SISA- stated income stated assets NIVA- no income verified assets SIVA- stated income verified assets
50
What are 2 types of loans that have negative amortization
Reverse mortgages Graduated payment mortgages (GPM)

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