Question

1.Mortgage Bankers specialize in:

A:investing and maintaining mortgages that they create.

B:borrowing money through the creation of mortgages that is used to invest in real estate.

C:purchasing mortgages originated by other financial institutions.

D:originating mortgages and selling those mortgages.

2.In an amortization schedule of monthly mortgage payments,:

A.principal payments exceed interest payments early on.

B.None of these.

C.interest payments exceed principal payments early on.

D.the amount of interest in each payment is equal to the principal paid.

Answer 1

1.

Option D is correct.

A mortgage banker that is a loan officer who is involved in both originating and selling mortgage loans. The mortgage bank lends their own capital to borrowers and collect payments in installments at certain loan rate or sell these loans in the secondary market so that they can get money which can be used to issue more loans.

2.

Option C is correct.

The amount of a mortgage payment has two component:

Interest Component

Principal Component

Initially, the borrower would be paying primarily interest with a small contribution of principal. As time passes, the principal part will increase for monthly payment, this is because the interest charged is based on the outstanding amount and this amount will keep on decreasing. Thus smaller the outstanding amount, lesser the interest.

For better understanding please check the example attached.

А в H Begin Loan Balance 120000 2 $100,344.30 3 $78,723.03 4 $54,939.64 5 $28,777.91 Payment at End of Year ($31,655.70) ($31,655.70) ($31,655.70) ($31,655.70) ($31,655.70) Interest Portion ($12,000.00) ($10,034.43) ($7,872.30) ($5,493.96) ($2,877.79) Ending Loan Principal Portion Balance ($19,655.70) $100,344.30 ($21,621.27) $78,723.03 ($23,783.39) $54,939.64 ($26,161.73) $28,777.91 ($28,777.91) $0.00