Mortgages

What is a mortgage?

• is an unchanging rate charged on a liability, such as a loan or mortgage.

• is a loan from a bank that a person can use to finance the purchase of a house. 

• The amount of money a person pays upfront on a loan/payment.

• s a type of loan where the interest changes according to changes in market interest rates.

A 30-year mortgage payment will be $1800/month and a 15-year mortgage payment will be $2400/month. Assume the same interest rate for both. Which of the following is NOT TRUE?

• $1800 a month will be the quickest way to pay off your mortgage in less than 30 years.

• 30 years will give you more time to pay and not tie up as much of your monthly income.

• A 15 year mortgage will cost more monthly but will cost less over the life of the loan.

• The amount of interest paid on the 15-year mortgage will be less than the 30-year mortgage.

ARM stands for

• Annual reduction mortgage

• Appreciation rate monthly

• Almost ridiculous math

• Adjustable rate mortgage

PITI stands for

• Home owners remorse

• Property inflation tax income

• Principal, interest, taxes and insurance

• Previous income tax insurance

What is a fixed-rate mortgage?

• A loan with an interest rate that remains the same throughout the term

• A loan with an interest rate that changes monthly

• A loan with no interest rate

• A loan with a decreasing interest rate

What does LTV stand for in mortgage terms?

• Loan to Value

• Lease to Value

• Loan to Variable

• Lease to Variable

What is an interest-only mortgage?

• A mortgage where only the interest is paid for a set period

• A mortgage with no interest

• A mortgage where only the principal is paid

• A mortgage with a fixed interest rate

What is a reverse mortgage?

• A loan for seniors to convert home equity into cash

• A loan for buying a second home

• A loan with a reverse interest rate

• A loan for refinancing

What is the purpose of mortgage insurance?

• To protect the lender in case of borrower default

• To protect the borrower from interest rate hikes

• To insure the property against damage

• To insure the borrower against job loss

What is an amortization schedule?

• A table detailing each periodic payment on a loan

• A schedule for property tax payments

• A timeline for home renovations

• A list of potential lenders