The conventional fixed-rate loan is not the only option available to borrowers in today's competitive marketplace, nor is it the only type of loan that secondary market companies are willing to buy. True or False?
The increased interest (profit) from the 10 percent LTV loan, to 80-10-10 lenders, is worth the ____________ risk of a loan without PMI.greaterBorrowers are attracted to piggyback loans because they have ________ monthly payments than conventional loans with PMI; however, since the second mortgage is not cancelable, 80- 10-10 loans may be ________ expensive to a borrower over time!lower- moreLenders have the option of varying the amount of the monthly principal payments. This is usually done in one of two formats: _________ & ___________?graduated payment mortgage (GPM) and the growth equity mortgage (GEM)._______ are intended for borrowers who would not be able to make the payments on a traditional mortgage.graduated payment mortgage (GPM)Early payments are low and increase in steps ("graduate") in the first few years.Often, these loans negatively amortize in the first years.the graduated payment mortgage (GPM)GPMs have a high rate of _______ and for this reason usually carry a higher ________ rate than their fixed-rate counterparts.default & interestGrowth Equity Mortgage are similar to Graduated Payment Mortgages but are intended for borrowers who want to __________?pay off their mortgages more quickly.They are essentially mortgages with scheduled prepayment, with payments that increase either by a fixed amount or by some amount determined by a market index.Growth Equity MortgageThere is NO negative amortization when is comes to ___________ __________ mortgages.Growth Equity Mortgage____________ mortgages have five- to seven-year terms with payments based on a 30-year fully amortizing loan.BalloonAt the end of the balloon term, the ___________ _______________ loan balance is due.entire remainingSome balloon mortgages carry the option of converting the mortgage to a __________- or _________ loan at the end of their terms.fixed-rate 25 & 23-yearA _________ mortgage is any second encumbrance on the property, subordinate to the first mortgage, which makes the payments for that first mortgage.wraparoundFor example, a seller may issue a _____________ mortgage to a buyer that has a higher interest rate than the seller's mortgage, so the seller uses the borrower's payments to make his or her own mortgage payments and pockets the differencewraparoundIn a _____________ mortgage , the borrower receives monthly disbursements of the RAM loan over a term of about 10 years, based upon the equity she or he already has in the collateral property.reverse annuity -RAMAt the end of ___________________ mortgage loan term, the full amount of the loan plus interest is due. This amount due is usually paid for by _____________ the property, so this type of loan is usually used by people who do not plan to occupy the property at the end of the term.reverse annuity -RAM & sellingBorrowers can reduce the interest rate on many loans through a ________________ or ___________?permanent or temporary buydown._____________ buydowns reduce the interest rate throughout the term of the loan and are paid for with discount points.Permanent___________ buydowns reduce the interest rate for several years and are paid for with escrow accounts established by an interested party in the loan transaction.
