Finance
A conventional loan that exceeds the conforming loan limit set by the FHFA is called a:
AFHA loan
BVA loan
CJumbo loan✓ Correct
DBalloon loan
Explanation
A jumbo loan is a conventional mortgage that exceeds the conforming loan limits set by the FHFA, making it ineligible for purchase by Fannie Mae or Freddie Mac.
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Key Terms to Know
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.
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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