Finance
The secondary mortgage market in Utah and nationwide primarily:
AProvides direct loans to homebuyers
BBuys mortgages from lenders, replenishing their capital so they can make more loans✓ Correct
CRegulates mortgage interest rates
DProvides down payment assistance
Explanation
The secondary mortgage market (dominated by Fannie Mae and Freddie Mac) buys loans from primary lenders, packages them as mortgage-backed securities, and sells them to investors. This replenishes lenders' capital, enabling them to originate more loans.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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