13. Vocabulary - Mortgage-related concepts and terminology

Are all mortgage loans alike?

In short, the answer is no! Mortgage loans vary with the preferences of the individual lender and the borrower.

In general, mortgage loans can be differentiated according to their terms of payment, their down payment requirements, and whether they are insured or guaranteed.

Mortgage loans, or loans that use as collateral, are made by commercial banks, thrift institutions, and mortgage bankers. In addition to these traditional sources, mortgage brokers also solicit borrowers and originate a large volume of these loans. Brokers often place their loans with these traditional mortgage lenders as well as with .

Which of the following statements accurately describe the similarities and differences between mortgage bankers and mortgage brokers? Check all that apply.

Many mortgage bankers ultimately sell the mortgages that they create.

Mortgage bankers lend their own money to borrowers, while mortgage brokers have relationships with a large number of lenders.

Although mortgage brokers often appear to work on behalf of their borrowing customers, they are ultimately paid by the mortgage lender.

Select the term associated with mortgage loans that corresponds to each of the given descriptions. (Note: These are not necessarily complete definitions, but there is only one possible answer for each description.)

Description	Term
This mortgage is characterized by a constant interest rate and constant monthly payments over the life of the loan.
This mortgage, which is usually structured as an ARM and is used to finance the purchase of more expensive properties, allows the borrower to pay only the accrued interest each month for 5 to 10 years.
Over the life of this mortgage, the interest rate and the monthly payment can be adjusted based on changes in a market interest rate.
This mortgage allows borrowers to make smallerbut gradually and constantly increasingpayments for the first three to five years. At the end of this period, the payments then stabilize at the higher level and are repaid over the remaining life of the loan.
The lender in this type of mortgage assumes all of the risk of loss, including that caused by borrower default.