3.9 Mortgages

In a mortgage, a down payment is:

• A payment made by the lender towards the purchase price of the property.
• Initial payment made by the borrower towards the purchase price of the property.
• A payment made by the government towards the purchase price of the property.
• A payment made by the real estate agent towards the purchase price of the property.

What is the average length of a mortgage?

• 1-2 years

• 3-5 years

• 10-30 years

• 20-50 years

When annuities are used to repay mortgage loans, we call this:

• amortization

• annuityzation

• I O U

• interest loans

A mortgage term is:

• The interest rate on a mortgage loan.
• The length of time a borrower agrees to repay the mortgage loan at a specific interest rate.

• The type of property that can be purchased with a mortgage loan.
• The amount of money a borrower pays upfront for a mortgage loan.
• The interest rate used for the entirety of the mortgage repayment.

Nic would like to purchase a house. He needs a mortgage of $375,000. The mortgage will be repaid with equal monthly payments over 25 years at 4% compounded monthly. What will his monthly payment be?

• $1,500.00
• $2,574.39

• $1,897.51

• $3,000.00

Nic would like to purchase a house. He needs a mortgage of $375,000. The mortgage will be repaid with equal monthly payments over 25 years at 4% compounded monthly. What is the total amount of interest that Nic will pay over the 25 years?

• $194,253

• $515,927

• $250,000

• $105,030