Check all that apply. a credit card a down payment a house land a vehicle Answer: a down payment. Explanation: Borrowers use a down payment to secure a mortgage loan. A down payment refers to a payment made on an asset fund with debt.
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What do you need to secure a mortgage?
What Documents Do I Need To Get A Mortgage?At least 2 years of federal tax forms.Your two most recent W-2s and pay stubs.1099 forms, or profit and loss statements if you're self-employed.More items...
What does a mortgage secure?
Secured loans are debt products that are protected by collateral. This means that when you apply for a secured loan, the lender will want to know which of your assets you plan to use to back the loan. The lender will then place a lien on that asset until the loan is repaid in full.
What are the three main items to qualify for mortgage?
Here are some of the key factors that determine whether a lender will give you a mortgage.Your credit score. Your credit score is determined based on your past payment history and borrowing behavior. ... Your debt-to-income ratio. ... Your down payment. ... Your work history. ... The value and condition of the home.
What does a bank use for security on a home loan?
Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. For a mortgage, the collateral is often the house purchased with the funds from the mortgage.
What is a secured loan quizlet?
What is a secured loan? A loan in which you pledge collateral (something of value like a house or a car) to the lender to secure payment of the loan.
What are examples of secured loans?
A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, and in the case of these loans, the collateral is your home or car.
What are the four things you need to qualify for a mortgage?
Standards may differ from lender to lender, but there are four core components — the four C's — that lender will evaluate in determining whether they will make a loan: capacity, capital, collateral and credit.
Which of these are factors that lenders use to make loan decisions?
7 Factors Lenders Look at When Considering Your Loan ApplicationYour credit. ... Your income and employment history. ... Your debt-to-income ratio. ... Value of your collateral. ... Size of down payment. ... Liquid assets. ... Loan term.
Which two of these are essential for completing an initial mortgage loan application?
such as name, address, social security number, and contact details – all of which you probably know off the top of your head. However, there are some extra details that are vital for when you apply for a mortgage. These are the house cost / the amount of loan you are asking for, and the details of your income.
What security is required for a loan?
collateralThe term collateral refers to an asset that a lender accepts as security for a loan. Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan. The collateral acts as a form of protection for the lender.
What are security documents?
What are security documents? The term “security documents” refers to docu- ments that incorporate specific elements intended to make them more difficult to counterfeit, falsify, alter or otherwise tamper with.
Is a mortgage a security?
A mortgage is not a loan and it is not something that the lender gives you. It is a security instrument that you give to the lender, a document that protects the lender's interests in your property.
Is a mortgage-backed security a security?
Here are some of the most common types of mortgage-backed securities: Pass-Throughs: The most basic mortgage securities are known as pass-throughs....Mortgage-Backed Securities Snapshot.IssuerAgencies of the federal government, GSEs and private financial organizationsMinimum InvestmentVaries—generally $10,0006 more rows
What is a mortgage-backed security for dummies?
1:061:49Mortgage-Backed Securities (MBS) Explained in One Minute - YouTubeYouTubeStart of suggested clipEnd of suggested clipThe investment bank takes Dave's loan as well as several other loans and creates a package calledMoreThe investment bank takes Dave's loan as well as several other loans and creates a package called mortgage-backed. Security or MBS. And for the investment bank then sells the mortgage-backed security
How do mortgage bonds work?
A mortgage bond is a bond in which holders have a claim on the real estate assets put up as its collateral. A lender might sell a collection of mortgage bonds to an investor, who then collects the interest payments on each mortgage until it's paid off. If the mortgage owner defaults, the bondholder gets the house.
Why do lenders require borrowers to secure credit?
Explanation: Some lenders require borrowers to secure credit in order to reduce risk because they might not be able to pay back the debt or loan. In essence, it is called credit risk. A lender is an individual who gives out his money as a loan to another individual.
What are the components of a mortgage?
One may also ask, what can you include in a mortgage? A mortgage payment consists of four components (often collectively referred to as PITI): principal, interest, taxes, and insurance ( both property insurance and private mortgage insurance, if required by your mortgage).
