QUIZ Module 2: Lesson 1: Mortgage Loans: Structures and Types

Traditionally, the standard fixed rate level annuity loan was based on an amortization period of ____________.

30years

ARM stands for:

adjustable rate mortgages

Which loan product might be used by a builder to help sell inventory and reduce interest carry costs despite reducing the builder's profitability?

buydown mortgage

A _______________ is an interim loan that is used to cover the costs associated with building or renovating the property. It is the means of providing funds necessary to pay the contributors to the building process.

construction loan

TRUE or FALSE: Bi-Weekly loans are a variant of a fixed rate level annuity loan, which simply increases the frequency of payment, while in the process of reducing the loan's overall interest carry costs. Over the course of a year 23 bi-weekly payments are made rather than 12 monthly ones.

false *26 bi weekly payment

A __________________ is a residential mortgage financing option in which a property is purchased using more than one mortgage from one or more mortgages. Very often, a second mortgage is secured from a lender different from the one providing the first mortgage.

piggyback loan

A loan characterized by periodic payments of interest, followed by a single lump sum re-payment of the loan principal at the end is known as a(n) ___________________.

term loan

_________________ is the starting point for calculating a new note rate once the adjustment intervals arrive, and a new monthly payment must be calculated.

the index

______________ is the interest rate charged for the initial pre-adjustment period of the loan, which typically ranges from one to five years, and possibly seven, depending on how aggressively lenders want to market ARM products to attract customers.

the teaser rate

________________ mortgage is two or more mortgages consolidated into one payment, and is usually designed to allow the buyer to purchase with a smaller down payment, with the added benefit of a below market interest rate first mortgage. The sellers receive all of their cash at the time of closing, while the lender wraps new money around an existing assumable loan. This type of loan limits its use to homes with an existing FHA or VA loans because most other conventional loans have alienation or due on sale clauses.

wrap around mortgage