What is the primary purpose of conforming loan limits established by the Federal Housing Finance Agency (FHFA)?
Correct Answer
A) To determine the maximum loan amount that can be purchased by Fannie Mae and Freddie Mac
Conforming loan limits are set annually by the FHFA to determine the maximum loan amount that Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac can purchase or guarantee. Loans above these limits are considered jumbo or non-conforming loans.
Why This Is the Correct Answer
Conforming loan limits are set annually by the FHFA to determine the maximum loan amount that Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac can purchase or guarantee. Loans above these limits are considered jumbo or non-conforming loans.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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