Finance
Indiana's secondary mortgage market participant Fannie Mae primarily:
AMakes mortgage loans directly to Indiana homebuyers
BPurchases conforming mortgages from lenders to provide liquidity for continued lending✓ Correct
CInsures FHA loans in Indiana
DSets the prime interest rate for Indiana banks
Explanation
Fannie Mae (FNMA) operates in the secondary mortgage market by purchasing conforming conventional mortgages from primary lenders, freeing up capital so lenders can make new loans.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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