Finance
The primary market in mortgage lending consists of:
AFannie Mae and Freddie Mac
BLenders who originate mortgage loans directly to borrowers✓ Correct
CMortgage-backed securities investors
DFederal Home Loan Banks
Explanation
The primary mortgage market consists of lenders (banks, credit unions, mortgage companies) who originate mortgage loans directly to borrowers. The secondary market is where those loans are bought and sold after origination.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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