37757092
Description
Flashcards by McKenzie Layton, updated more than 1 year ago
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Created by McKenzie Layton
over 1 year ago
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| Question | Answer |
| Subprime loan | A loan with a rate higher than prime due to uncertainty of payment, 403. |
| Fixed-rate mortgage | Monthly payment fixed over number of years, usually 30 years, 403, 404. |
| Graduated-payment mortgage (GPM) | Borrower pays less at beginning of mortgage. As years go on, the payments increase, 404. |
| Adjustable rate mortgage (ARM) | Rate of mortgage is lower than a fixed rate mortgage. Rates adjusted without refinancing. Caps available to limit how high rate can go for each adjustment period over term of loan, 404. |
| Interest-only mortgage | Type of mortgage where in early years only interest payment is required, 404. |
| Biweekly mortgage | Mortgage payments made every 2 weeks rather than monthly. This payment method takes years off the life of the mortgage and substantially reduces the cost of interest, 403, 404. |
| Mortgage | Cost of home less down payment, 404. |
| Reverse mortgage | Federal Housing Administration makes it possible for older homeowners to live in their homes and get cash or monthly income, 404–405. |
| Monthly payment | Amount paid each period to pay off part of the mortgage, 405–408. |
| Amortization table | A table that shows each periodic payment on a loan or mortgage, 405–406. |
| Closing costs | Costs incurred when property passes from seller to buyer such as for credit reports, recording costs, points, and so on, 407. |
| Points | Percentage(s) of mortgage that represents an additional cost of borrowing. It is a one-time payment made at closing, 407. |
| Escrow account | Lending institution requires that each month of the insurance cost and real estate taxes be kept in a special account, 408. |
| Home equity loan | A loan using the borrower’s home equity as collateral, 404, 408. |
| Home equity line of credit | A revolving line of credit secured by your home equity, 408. |
| Cash-out refinance | Borrowing more than the current mortgage and taking the difference out in cash, 408. |
| Amortization schedule | Shows monthly payment to pay back loan at maturity. Payment also includes interest. Note payment is fixed at same amount each month, 409. |
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