Mortgage Products and Programs Flashcards
6 cards from real Mortgage Loan Originator practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Mortgage Products and Programs flashcards as text
What is a 'bridge loan' and when is it typically used?
Answer: A short-term loan used to bridge the gap between buying a new home and selling the existing one
A bridge loan provides short-term financing allowing a homeowner to purchase a new property before selling their current one, using existing equity as collateral.
What is the difference between a rate-and-term refinance and a cash-out refinance?
Answer: Rate-and-term only modifies the rate or term; cash-out provides the borrower with proceeds above the payoff amount
A rate-and-term refinance adjusts the interest rate or loan term without increasing the loan balance, while a cash-out refinance results in a new loan exceeding the existing balance with the difference paid to the borrower.
A reverse mortgage is designed for homeowners who are at least:
Answer: 62 years old
HECM (Home Equity Conversion Mortgage) reverse mortgages are available to homeowners aged 62 and older, allowing them to convert home equity into loan proceeds.
Which type of mortgage loan allows the borrower to pay only the interest for an initial period before principal payments begin?
Answer: Interest-only mortgage
An interest-only mortgage allows the borrower to pay just the interest portion for an initial period, after which payments adjust to include both principal and interest.
What is the purpose of mortgage discount points?
Answer: To prepay interest upfront in exchange for a lower interest rate
Discount points are prepaid interest paid at closing — typically 1% of the loan amount per point — to permanently reduce the interest rate on the mortgage.
An assumable mortgage allows the buyer to:
Answer: Take over the seller's existing mortgage at its original terms
An assumable mortgage allows a qualified buyer to take over the seller's existing loan at the original interest rate and terms, which can be advantageous in a rising rate environment.