Mortgage Terms 5

Question 1

What is a 'rate lock' in mortgage lending?

Accepted Answer

A lender's guarantee to hold a specific interest rate for a set period while the loan is being processed

Answer

A penalty charged when the borrower switches lenders

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A requirement to maintain the same lender for the life of the loan

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A clause preventing the borrower from refinancing for a set period

Question 2

What is 'mortgage seasoning'?

Accepted Answer

The length of time a borrower has held a mortgage, often required before refinancing or cashing out equity

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The process of adjusting a mortgage rate based on market conditions

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Adding inflation adjustments to a mortgage payment over time

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The period during which a mortgage rate is fixed before adjusting

Question 3

What is a 'recourse loan' in mortgage lending?

Accepted Answer

A loan where the lender can pursue the borrower's personal assets beyond the collateral if they default

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A loan that can be refinanced without a credit check

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A government-backed mortgage with special borrower protections

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A loan structured so the lender takes a share of any property appreciation

Question 4

What is a 'no-doc' or 'stated income' mortgage?

Accepted Answer

A loan where borrowers state their income without providing traditional documentation to verify it

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A mortgage that requires no down payment

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A mortgage with no origination fees or closing costs

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A loan that does not appear on the borrower's credit report

Question 5

What is the 'primary mortgage market'?

Accepted Answer

The market where mortgage loans are originated directly between lenders and borrowers

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The largest mortgage lender in a given geographic region

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The government-sponsored entities that set mortgage guidelines

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The market where existing mortgages are bought and sold between investors

Question 6

What is 'mortgage recasting' (also called re-amortization)?

Accepted Answer

Making a large lump-sum principal payment and having the lender recalculate a lower monthly payment over the remaining term

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Switching from an adjustable-rate to a fixed-rate mortgage mid-term

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Extending the loan term to lower monthly payments without paying extra principal

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Combining two mortgages into a single loan

Question 7

What is a 'satisfaction of mortgage' document?

Accepted Answer

A legal document issued by the lender confirming the mortgage has been fully paid off and releasing the lien

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A borrower's written approval of the loan terms at closing

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A lender's appraisal confirming the property meets loan requirements

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A document showing the borrower's payment history throughout the loan