Finance
A 'non-conforming loan' (jumbo loan) in Pennsylvania differs from a conforming loan in that:
AIt is used for non-conforming construction like modular homes
BThe loan amount exceeds the conforming loan limit set by the FHFA and cannot be sold to Fannie Mae or Freddie Mac✓ Correct
CIt is a loan that does not conform to FHA guidelines
DIt requires non-conventional financing terms
Explanation
A jumbo (non-conforming) loan exceeds the FHFA's conforming loan limit ($766,550 for most areas in 2024). These loans cannot be purchased by Fannie Mae or Freddie Mac, so lenders keep them in portfolio or sell to private investors.
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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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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