Finance
Ginnie Mae (GNMA) primarily supports the mortgage market by:
APurchasing conventional conforming loans
BGuaranteeing mortgage-backed securities backed by government-insured loans (FHA, VA, USDA)✓ Correct
COriginating government mortgages directly to borrowers
DSetting maximum loan limits for FHA loans
Explanation
Ginnie Mae (Government National Mortgage Association) guarantees the timely payment of principal and interest on mortgage-backed securities backed by FHA, VA, and USDA loans, supporting the government-backed mortgage market.
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Key Terms to Know
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.
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.
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.
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