What is 'prepayment penalty' in a Delaware mortgage, and are they permitted?
Why A fee some lenders charge for paying off a mortgage early; allowed in some loan types but restricted or prohibited in FHA, VA, and Qualified Mortgage (QM) loans Is Correct
Answer B: A fee some lenders charge for paying off a mortgage early; allowed in some loan types but restricted or prohibited in FHA, VA, and Qualified Mortgage (QM) 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.
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Key Terms to Know
Prepaid 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.
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.
Math Concepts
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