What is the primary function of the secondary mortgage market?
Why To buy mortgage loans from lenders, freeing up capital for new loans Is Correct
Answer B: To buy mortgage loans from lenders, freeing up capital for new loans
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related Alabama Questions
- The secondary mortgage market in Alabama allows lenders to:Finance
- The secondary mortgage market is best described as:Finance
- A buyer who purchases property 'subject to' an existing mortgage:Escrow & Title
- A lender that sells a mortgage on the secondary market but retains the servicing rights is:Finance
- The debt-to-income ratio used by mortgage lenders typically should not exceed what percentage for conventional loans?Finance
Key Terms to Know
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →