Finance
A 'jumbo loan' in New York is a mortgage that:
AIs guaranteed by the federal government
BExceeds the conforming loan limits set by Fannie Mae and Freddie Mac✓ Correct
CHas an interest rate above 8%
DRequires a minimum 30% down payment
Explanation
A jumbo loan exceeds the conforming loan limits established by FHFA for Fannie Mae and Freddie Mac. Because they cannot be sold to the GSEs, jumbo loans often have stricter underwriting requirements.
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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.
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.
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.
Math Concepts
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