Question

11) Which of the following is a characteristic of a balloon loan?

A) Prior to maturity, the borrower only pays interest (usually monthly).

B) The loan is typically 10 - 15 years in maturity.

C) At maturity, the entire loan amount is due.

D) All of the above are true.

E) Only A and C of the above are true.

12) Which of the following protects the mortgage lender's right to sell property if the underlying loan defaults?

A) A lien

B) A down payment

C) Private mortgage insurance

D) Borrower qualification

E) Amortization

13) The interest rate borrowers pay on their mortgages is determined by

A) current long-term market rates.

B) the term.

C) the number of discount points.

D) all of the above.

14) A borrower who qualifies for an FHA or VA loan enjoys the advantage that

A) the mortgage payment is much lower.

B) only a very low or zero down payment is required.

C) the cost of private mortgage insurance is lower.

D) the government holds the lien on the property.

15) Growing-equity mortgages (GEMs)

A) help the borrower pay off the loan in a shorter time.

B) have such low payments in the first few years that the principal balance increases.

C) offer borrowers payments that are initially lower than the payments on a conventional mortgage.

D) do all of the above.

E) do only A and B of the above.

Answer 1

11 (C) At maturity, the entire loan amount is due.

12 (A) A lien

13 (D) all of the above,

14 (B) only a very low or zero down payment is required.

15 (c) offer borrowers payments that are initially lower than the payments on a conventional mortgage