Finance
What is the secondary mortgage market's primary function in South Carolina real estate financing?
ATo provide loans directly to homebuyers
BTo provide liquidity by purchasing mortgages from primary lenders✓ Correct
CTo insure FHA and VA loans
DTo regulate mortgage interest rates
Explanation
The secondary mortgage market (primarily Fannie Mae, Freddie Mac, and Ginnie Mae) purchases mortgages from primary lenders, providing them with capital to make new loans and maintaining liquidity in the mortgage market.
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Key Terms to Know
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.
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.
Math Concepts
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