Glossary - Mortgage Terms - Page #1

11 Questions | Total Attempts: 41

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Glossary - Mortgage Terms - Page #1

Define mortgage terms provided on glossary page #1


Questions and Answers
  • 1. 
    Which choice best defines ADJUSTABLE RATE MORTGAGE (ARM)?
    • A. 

      A short term loan with mortgage payments too low to pay off the balance in the specified time.

    • B. 

      A loan with an interest rate that does not change or adjust during the life of the loan.

    • C. 

      A loan that allows the interest rate to change periodically during the life of the loan.

  • 2. 
    Which choice best defines CREDIT GRADE?
    • A. 

      A number which indicates statistically how likely a potential borrower is to repay future debts.

    • B. 

      A grading system used by non-prime and private investors to determine the interest rate to be charged relative to the risk in the file.

    • C. 

      A one time fee paid to the lender to obtain a particular interest rate on a loan.

  • 3. 
    Which choice best defines APPRAISAL?
    • A. 

      The document that describes the value of a property as determined by a licensed appraiser.

    • B. 

      A certified inspector checks the property for sound structure & that everything is working correctly.

    • C. 

      A document that provides the value of a property by a certified underwriter.

  • 4. 
    Which choice best defines CLOSING FEE?
    • A. 

      The fees collected by the lender needed to make the loan.

    • B. 

      A charge to cover the cost of preparing the application for underwriting or can be used as a term used to describe the collection of the appraisal and credit report fees.

    • C. 

      A fee paid to the title insurance company that covers the closers services, the handling of the signing of the closing documents, and disbursement of funds.

  • 5. 
    Which choice best defines CLOSING COSTS?
    • A. 

      The fees collected by the lender needed to make the loan.

    • B. 

      A charge to cover the cost of preparing the application for underwriting or can be used as a term used to describe the collection of the appraisal and credit report fees.

    • C. 

      A fee paid to the title insurance company that covers the closers services, the handling of the signing of the closing documents, and disbursement of funds.

  • 6. 
    Which choice best defines APPLICATION FEE?
    • A. 

      The fees collected by the lender needed to make the loan.

    • B. 

      A charge to cover the cost of preparing the application for underwriting or can be used as a term used to describe the collection of the appraisal and credit report fees.

    • C. 

      A fee paid to the title insurance company that covers the closers services, the handling of the signing of the closing documents, and disbursement of funds.

  • 7. 
    Which choice best defines AUTOMATED UNDERWRITING SYSTEM (AUS)?
    • A. 

      A complex computer program that uses histoical information on millions of loans to determine if the facts presented on the loan application appear to meet the lender's or agency's requirements.

    • B. 

      A report issued by a credit bureau that indicates current outstanding debts and past payment history of a borrower.

    • C. 

      The automated underwriting system created by Freddie Mac.

  • 8. 
    Which choice best defines ANNUAL PERCENTAGE RAGE (APR)?
    • A. 

      The amount paid to the lender for use of the money that they lend the owner.

    • B. 

      A rate that represents the relationship of the total finance charges (interest, origination fee, etc) to the amount of the loan

    • C. 

      The amount that a lender adds to the index to determine an interest rate for an adjustable rate mortgage.

  • 9. 
    Which choice best defines COMBINED LOAN - TO - VALUE (CLTV)?
    • A. 

      A ratio determined by dividing the mortgage balance on a property by the lesser of the sales price or value.

    • B. 

      A fee collected by the lender to cover their costs to make the loan.

    • C. 

      A ratio determined by adding up all of the outstanding balances that will be remaining when a loan is closed and dividing by the lesser of the sales price or value of the property.

  • 10. 
    Which choice best defines CONSUMER REPORTING AGENCY?
    • A. 

      Companies such as Equifax, Experian and TransUnion that collect data from creditors and public records.

    • B. 

      Enacted in 1996, this act exercises control over the Credit Report Agencies.

    • C. 

      A legal entity that is separate from its shareholders, officers and directors.

  • 11. 
    Which choice best defines AMOUNT FINANCED?
    • A. 

      The fee charged to cover the company expense in setting up the loan for processing.

    • B. 

      The amount of credit provided to the borrower.

    • C. 

      A fee charged to the escrow agent to hold and disburse the funds.

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