Understanding Mortgages: Notes, Mortgages, and Different Types of Mortgage Loans, Quizzes of Quantitative Techniques

Download Understanding Mortgages: Notes, Mortgages, and Different Types of Mortgage Loans and more Quizzes Quantitative Techniques in PDF only on Docsity! TERM 1 What are the two elements of a Mortgage loan? DEFINITION 1 1. Note2. Mortgage TERM 2 Note DEFINITION 2 1. specifies the exact terms of the financial obligation2. 95- 99% of the paperwork3. contains all of the specifics 4. Says what the interest rate looks like TERM 3 Mortgage DEFINITION 3 1. pledges the property as security for the note2. paragraph- a page long3. ex: default on bank, they get property back TERM 4 Fixed Rate Mortgage DEFINITION 4 A fixed rate mortgage is a mortgage loan first developed by the Federal Housing Administration (FHA) where the interest rate on the note remains the same through the term of the loan. TERM 5 Adjustable Rate Mortgage DEFINITION 5 A variable-rate mortgage, adjustable-rate mortgage, or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. TERM 6 Interest Rate DEFINITION 6 Index Rate + Mortgage= Interest RateAn interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. TERM 7 Index Rate DEFINITION 7 Market-determined rate that is beyond the control of either the borrower or the lender. TERM 8 Margin DEFINITION 8 Lender's markup200-300 basis points TERM 9 Change Date DEFINITION 9 date the interest rate changes each time TERM 10 Teaser Rates DEFINITION 10 Initial temporary reduced interest ratesMarketing tool that gets you into a loanFOR YEAR 1 ONLYcaps do not apply to the teaser rate