Finance
What is 'seasoning' in the context of Delaware mortgage lending?
AThe time of year when mortgage rates are lowest
BThe length of time a borrower has held funds in an account, used to verify the source of down payment funds✓ Correct
CThe age of a mortgage before it may be refinanced
DThe period during which a borrower must occupy the property before renting it out
Explanation
In mortgage underwriting, 'seasoning' refers to the length of time funds have been in a borrower's account. Lenders typically require down payment funds to be 'seasoned' (held for 60-90 days) to verify they are not borrowed.
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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.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
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