Finance
The 'Equal Credit Opportunity Act' (ECOA) prohibits lenders from discriminating against mortgage applicants based on:
ACredit score and income only
BRace, color, religion, national origin, sex, marital status, age, or receipt of public assistance✓ Correct
CThe property's location
DThe amount of the requested loan
Explanation
ECOA prohibits lenders from discriminating in any aspect of a credit transaction based on race, color, religion, national origin, sex, marital status, age (provided the applicant is of legal age), or because the applicant receives public assistance.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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.
Math Concepts
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