Vocabulary - Mortgage-related concepts and terminology Are All Mortgage Loans Alike? In short, the answer is no! Mortgage loans vary with the preferences of the individual lender and the borrower In general, mortgage loans can be differentiated according to their terms of payment, their down payment requirements, and whether they are insured or guaranteed. Mortgage loans, or loans that use as collateral, are made by commercial banks, thrift institutions, and mortgage bankers. In addition to these traditional sources, mortgage brokers also solicit borrowers and originate a large volume of these loans. Brokers often place their loans with these traditional mortgage lenders as well as with Which of the following statements accurately describe the similarities and differences between mortgage bankers and mortgage brokers? Check all that apply. Although mortgage brokers often appear to work on behalf of their borrowing customers, they are ultimately paid by the mortgage lender Mortgage brokers lend their own money to borrowers, while mortgage bankers find borrowers for interested lenders as well as lenders for interested borrowers. Mortgage brokers earn their income from the interest on the mortgage loans, whille bankers earn their income in the form of commissions and loan-origination fees. To review the differences in the characteristics of different types of mortgage loans, match the types of mortgages and related programs listed on the left with their descriptions on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Description Answer on the loan for a Making Automobile and Housing Decisions These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Description Fixed-rate mortgage A. This mortgage allows the borrower to pay only the accrued interest on the loan for a specified period of time; after this date, all payments require the payment of both interest and principal Interest-only mortgage
B This mortgage is characterized by an interest rate and monthly payments that can be adjusted over the life of the loan based on movements in market interest rates. VA loan guarantee
C This mortgage is characterized by a constant interest rate and constant monthly payments over the life of the loan. Biweekly mortgage
D. This mortgage allows a borrower to convert from an adjustable-rate loan to a fixed-rater loan during a prespecified time period. Two-step ARM
E. This mortgage uses 26, rather than 12, payments per year to reduce the total amount of interest paid over the life of the loan and accelerate the repayment of the mortgage loan's principal-compared to an otherwise identical fixed-rate mortgage. This adjustable rate mortgage allows for only one rate change: a lower rate remains
F. Adjustable-rate constant for the first five to seven years of the loan's term and then increases to a mortgage higher constant rate that continues throughout the remaining life of the loan. This loan program, offered through a department of the federal government, provides
G. Convertible ARM mortgage insurance to lenders offering mortgage loans with loan-to-value ratios greater than 80% . This loan quarantee is offered by a department of the federal government to lenders
H. Graduated-payment ARM who make qualified loans to eligible veterans of the U. S. Armed Forces and their surviving spouses. This type of mortgage typically requires a down payment of 20% of the value of the
I. FHA mortgage insurance mortgaged property. This mortgage allows borrowers to make smaller-but gradually and constantly
J. Conventional mortgage increasing-payments for the first three to five years. At the end of this period, the payments then stabilize at the higher level and are repaid over the remaining life of the loan.