Check Your Understanding Answers
- Most conventional loans require the borrower to make how much of a down payment?
Most conventional loans require the borrower to make a down payment of 20% or more, making the loan 80% or less of the property’s sale price.
- List two advantages of conventional loans over government-backed loans. (Additional correct answers on page 40.)
- Processing a conventional loan usually takes less time. Loan approval from a conventional lender can take 30 days or less, while approval on a government-backed loan seldom, if ever, can be done in less than 30 days.
- There is usually no legal limit on loan amounts with conventional loans; however, government-backed loans have dollar limits that vary by agency.
- What are the two distinct features of fixed-rate, fully-amortized loans?
- The interest rate remains fixed for the life of the loan.
- The payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term.
- What is a payment cap?
A set monthly payment that remains the same although the actual interest rate may fluctuate throughout the year
