Finance
The secondary mortgage market is best described as:
AThe market for second mortgages
BWhere mortgages are bought and sold after origination✓ Correct
CBanks that specialize in subprime lending
DGovernment-backed loan programs
Explanation
The secondary mortgage market is where previously originated mortgage loans are purchased and sold, providing liquidity to lenders so they can make more loans.
People Also Study
Related Alabama Questions
- The secondary mortgage market in Alabama allows lenders to:Finance
- What is the primary function of the secondary mortgage market?Finance
- 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
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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 →