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30 Cards in this Set

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  • Back
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A mortgage is the longest and largest debt most people will ever incur.
True
A borrower cannot use mortgaged property until the debt is paid in full.
False
Interest rates are usually lower for fixed rate mortgages than for other types.
False
A shared application mortgage is another form of consumer loan tied to the apreciated value of a property.
False
A larger down payment on a home lowers the cost of the monthly payment.
True
Private mortgage insurance protects the lender against lone default; it is not typically required for borrowers whose down payment is 10 percent or greater.
False
The first step in the mortgage approval process is documentation.
False
The Gramm-Leach-Bliley Act requires that financial institutions protect the privacy of consumers.
True
Any escrow surplus of more than $50 must be returned to the borrower.
True
Qualifying veterans may get government-backed mortgage loans with low down payments through the Department of Veteran's Affairs.
True
Which of the following components of a fixed rate mortgage do not change?
all of the following
The rate to which a lender's interest rate is tied is called the
index
A point is a value equal to what percent of a mortgage loan?
1 percent
A reverse mortgage is repaid
when the borrower dies.
Generally speaking, housing costs should not exceed __________ of gross monthly income.
25 to 28 percent
percent
The final step of the mortgage approval process is
recording
It requires banks to record and report data on home lending in order to identify possible discriminatory patterns.
Home Mortgage Disclosure Act
The Real Estate Settlement Procedures Act was enacted
to protect consumers from hidden costs at closing time.
Which of the following statements about HOEPA loans is NOT true?
Lenders are prohibited from charging an APR that is 10 points higher than a rate on a Treasury Bill.
Today the home ownership rate in the United States is about
68 percent
percent
A _________ is a note, usually long term, secured by real property.
Mortgage
A fixed rate mortgage is also known as a ___________ mortgage.
convential
A type of fixed rate mortgage in which the entire remaining balance of the loan is due in one single large payment is called a ___________ mortgage.
balloon
In this kind of mortgage, the borrower prepays part of the interest in order to get a lower rate.
buy-down
The difference between what an item is worth and what is owed on it is called
Equity
The _________ cap is the specified overall maximum or minimum rate of an ARM, regardless of index.
lifetime
_________mortgage insurance (PMI) protects the lender against loan default.
Private
The refusal of banks to lend to residents of certain neighborhoods is called
redlining
The Federal Home Loan Mortgage Corporation is better known as
Freddie Mac
Most lenders require an amount called_________to be paid to them in advance; the lenders pay real estate taxes from this fund.
escrow