Mortgage Basics 101

Explore how a mortgage functions as a secured loan by placing a lien on the subject property, and learn how foreclosure can occur if repayment terms are not met.

Learn how the monthly housing expense combines principal and interest, hazard insurance, and property tax, with an escrow account that the lender uses to pay these obligations.

Define lender as an individual, group, or financial institution that provides funds to be repaid, and define borrower as a person who uses funds to buy property.

Explore forward mortgages repaid by monthly installments and reverse mortgages for seniors 62+, offering lump sums, monthly payments, or credit lines with repayment due on death, sale, or relocation.

Explore mortgage options for single family detached homes, duplexes, triplexes, fourplexes, manufactured homes, condos, and planned unit developments in gated communities.

Conventional loans are regular loans from a lender secured by the property, with options to purchase or refinance, while government loans supplement asset financing.

Explore government-backed FHA loans insured by the Federal Housing Administration, offering a 3.5 percent down payment and up to 96.5 percent financing for low to moderate income borrowers.

Explore home equity conversion mortgage, a reverse mortgage that lets seniors access cash from home equity as a line of credit, repaid when the property is sold or upon death.

Explore VA loans backed by the federal government and issued through private lenders, offering no down payment, no mortgage insurance, and a certificate of eligibility for service members and spouses.

Learn how USDA loans from the United States Department of Agriculture help people in rural and low-population areas buy homes, with broader rural definitions and refinance options.

Learn how rate and term refinance replaces an existing mortgage with a new loan to change the interest rate or loan term, often without advancing new money, as rates decline.

Choose cash out refinance to replace your existing mortgage with a new, higher loan and take the difference as cash, subject to bank standards, loan-to-value, and credit report.

Explain when FHA streamline refinance applies to borrowers with an FHA-insured mortgage, how the lower interest rate benefits them, and how they qualify by showing the refinance benefit.

Explore how the VA loan, backed by the federal government and issued through private lenders, offers no down payment, no mortgage insurance, and easier qualification with a certificate of eligibility.

See how a $70,000 mortgage on a $100,000 home leaves $30,000 as home equity. Equity grows as the borrower repays debt, the loan balance decreases, and the down payment increases equity.

Learn how a home equity line of credit (HELOC) acts as a revolving source of funds secured by home equity, with comparative rates and CLTV underwriting that determine credit limits.

Learn about fixed-rate, adjustable-rate, and hybrid adjustable-rate mortgages and how amortization ties principal and interest into a stable total payment for easy budgeting and rate protection.

Adjustable-rate mortgages offer a variable rate below fixed loans, with a fixed-rate period from one month to ten years and payments that adjust at prearranged frequencies.

Explore how the hybrid adjustable-rate mortgage blends fixed and adjustable rates, with an initial fixed period followed by annual market-based adjustments and the risk of higher costs if rates rise.

The borrower must complete the process of effect taking, with the title company researching and assuring clear title to protect both lender and buyer from hidden liens or conflicting ownership.

Title insurance protects both lender and buyer from financial loss due to defects in a title, including back taxes, liens, conflicting claims, and falsified documents, with a one-time fee.

Learn how a title search reviews public records to confirm ownership and uncover claims on a property, and how title insurance protects against forgery, flawed records, covenants, easements, and liens.

Appraisers determine a property's market value and deliver an appraisal report that lenders use to set loan amounts and evaluate loan-to-value ratios and down payments.

Explore the role of closing and settlement agents in real estate financing, coordinating document signing, transferring legal title, delivering securities, and ensuring contract obligations are met.

Explore the national mortgage licensing system and registry (NMLS) and how a national platform coordinates regulators and information sharing to boost efficiency and protect consumers in mortgage transactions.

Fannie Mae and Freddie Mac back the mortgage market with liquidity and guarantees to lenders, while Guinea Me guarantees principal and interest on mortgage backed securities issued by approved lenders.

A mortgage broker acts as a third-party intermediary who connects borrowers with lenders, assists borrowers with their requirements, and smooths the loan application process.

Explain the loan officer's initial borrower profile review, information gathering to complete the loan package, representation for borrower or lender, and the underwriter's final approval or denial after document review.

Identify how mortgage loan origination begins when the lender takes the borrower's application, then ends with loan approval and a closing cost recorded per the agreed terms.

Explore your UK credit history through a report from the bureaus (Equifax, Expedients and TransUnion), noting FICO scores and how lenders may rely on the median of the three reports.

Understand the uniform residential loan application form, its required signatures by the borrower and stakeholders who can pay the monthly payments, and its role in mortgage applications.

Choose the mortgage type and loan details, selecting conventional mortgage with fixed-rate amortization, for a loan amount of $80,000 over 360 months.

Learn to fill a mortgage loan form by detailing subject property's address, age, units, location, and loan purpose, then calculate cost, value, improvements, liens, and funds for construction or refinance.

Section three covers borrower details lenders require, including name, date of birth, years of schooling, present address, and ownership type, noting residency and renting can influence loan approval.

Focuses on borrowers' employment, showing how lenders assess stability from three years as an executive across multiple employers, helping analysts gauge reliability.

Analyze monthly income alongside combined housing expenses to understand mortgage decisions, including rental status and the balance between earnings and housing costs.

Highlight assets as land, cash, stocks, and bonds and liabilities like loans to compute net worth. Outline purchase price, improvements, and declarations, acknowledgments, and agreement.

Explore loan estimate and closing disclosure, learn what each document covers, the three business days timing after a complete loan application, and why interest rates vary by lender.

Explore how lending acts as a middleman between borrowers and lenders, how loan applications are analyzed and forwarded to mortgage lenders, and how borrowers' payments move to the new lender.

Break into the mortgage industry and excel with course insights, gain clarity on mortgage concepts, and sharpen your resume for the borrower and lenders alike.