Finance
Under Washington State's High-Cost Mortgage Protection Act (RCW 61.34), certain high-cost home loans are subject to additional consumer protections. These protections include restrictions on:
AMaximum loan amounts for first-time buyers
BBalloon payments, negative amortization, prepayment penalties, and other predatory features✓ Correct
CMinimum down payment requirements
DThe use of adjustable-rate mortgages for primary residences
Explanation
Washington's High-Cost Mortgage Protection Act provides additional consumer protections for high-cost home loans, prohibiting certain practices such as balloon payments for short-term loans, negative amortization, excessive prepayment penalties, and other terms that characterize predatory lending.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
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.
Math Concepts
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