Finance
A NJ 'jumbo' mortgage loan is one that:
AIs guaranteed by FHA
BExceeds the conforming loan limits set by Fannie Mae/Freddie Mac for the area✓ Correct
CHas an interest rate above 8%
DIs made to a corporation rather than an individual
Explanation
A jumbo loan exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. In NJ's high-cost areas, conforming limits are higher than the national baseline, but any loan above those limits is a jumbo requiring different underwriting and pricing.
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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.
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.
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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