Finance
A Florida borrower is applying for a 'jumbo' mortgage. This means the loan amount:
AHas a government guarantee
BExceeds the conforming loan limit set by FHFA and therefore cannot be sold to Fannie Mae or Freddie Mac✓ Correct
CIs for a property with more than 4 units
DHas a maximum term of 15 years
Explanation
A jumbo loan exceeds the conforming loan limits set by the FHFA (which are adjusted annually). Because it cannot be sold to Fannie Mae or Freddie Mac, jumbo loans carry more risk for lenders and typically require stronger credit, larger down payments, and may have higher rates.
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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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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