lesson 6- mortgage fina 200

Amortization period

"The expected number of years it will take a borrower to pay off the entire mortgage loan balance."

Closed mortgage

"Restricts your ability to pay off the mortgage balance during the mortgage term unless you are willing to pay a financial penalty."

Conventional mortgage

"A mortgage where the down payment is at least 20 percent of the home’s appraised value."

Fixed-rate mortgage

"A mortgage in which a fixed interest rate is specified for the term of the mortgage."

Gross Debt Service (GDS) ratio

"Your monthly mortgage-related debt payments—including mortgage loan repayments

High ratio mortgage

"A mortgage where the down payment is less than 20 percent of the home’s appraised value."

Home inspection fee

"A report on the condition of the home. If the home requires any major repairs

Mortgage refinancing

"Paying off an existing mortgage with a new mortgage that has a lower interest rate."

Mortgage stress test

"A set of rules that federally regulated financial institutions must use to determine how large a mortgage loan you can carry."

Mortgage term

"The period of time over which the mortgage interest rate and other terms of the mortgage contract will not change."

Open mortgage

"Allows you to pay off the mortgage balance at any time during the mortgage term."

Payment frequency

"The frequency with which you make a mortgage payment."

Pre-approval certificate

"Provides you with a guideline on how large a mortgage you can afford and an estimate of your mortgage payment based on your financial situation."

Prepayment privileges

"Features that allow borrowers to increase their monthly mortgage payment and to pay off a lump sum of the original mortgage balance during the course of each mortgage year."

Total Debt Service (TDS) ratio

"Your mortgage-related debt payments plus all other consumer debt payments divided by your total monthly gross household income."

Variable-rate mortgage

"A mortgage in which the interest charged on the loan changes in response to movements in the prime lending rate."