General Mortgage Knowledge Flashcards
7 cards from real SAFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 General Mortgage Knowledge flashcards as text
What is a 'jumbo loan'?
Answer: A loan that exceeds the conforming loan limits set by the FHFA
A jumbo loan exceeds the FHFA's conforming loan limits and cannot be purchased by Fannie Mae or Freddie Mac.
A 'balloon mortgage' is characterized by:
Answer: A large lump-sum payment due at the end of a shorter loan term
A balloon mortgage has smaller periodic payments followed by one large final payment (the balloon) that pays off the remaining balance.
Which entity sets the guarantee fee (g-fee) on loans sold to Fannie Mae and Freddie Mac?
Answer: The FHFA
The Federal Housing Finance Agency (FHFA) oversees the GSEs and sets policies governing guarantee fees charged on conforming loans.
What does 'negative amortization' mean?
Answer: The outstanding loan balance increases because payments don't cover all interest due
Negative amortization occurs when monthly payments are insufficient to cover accrued interest, causing the unpaid interest to be added to the loan balance.
Which of the following is a characteristic of a reverse mortgage?
Answer: Monthly payments are made by the lender to the borrower
In a reverse mortgage, the lender makes payments to the borrower or provides a line of credit, drawing on the homeowner's equity.
What is the purpose of a 'title search' in the mortgage process?
Answer: To verify there are no outstanding liens or ownership disputes on the property
A title search reviews public records to ensure the seller has clear ownership and the property is free of liens, judgments, or disputes.
Under TRID, what is the maximum number of days a lender has to provide the Closing Disclosure before consummation?
Answer: 3 business days
TRID requires lenders to provide the Closing Disclosure at least 3 business days before loan consummation.