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Home Ownership — Quiz Answers

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1
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What are closing costs in a mortgage transaction?

A
penalties for paying off the mortgage early
B
charges for terminating a mortgage agreement before its maturity
C
costs incurred from refinancing a mortgage
D
fees and expenses associated with finalizing the mortgage agreement
2
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What is a characteristic of an adjustable-rate mortgage (ARM)?

A
The mortgage is only available for short-term loans.
B
The interest rate stays constant for the entire loan term.
C
The interest rate can vary based on an index, typically after a set initial period.
D
The interest rate decreases each year, regardless of market conditions.
3

What are "points" in the context of a mortgage?

A
a discount given for making early payments
B
an interest rate that increases with each payment
C
charges for late mortgage payments
D
fees paid at closing to lower the interest rate
4

Cristian is considering a mortgage where he has to pay an origination fee of 1.5% one a $⁢350,000 mortgage, a flat brokerage fee of $⁢1,500 , documentary stamps costing $⁢800 , and prorated expenses of $⁢450 What is the total upfront costs Cristian would have to pay? Enter your answer in the box.

Answer:

8000

5

What happens to the interest rate on a fixed-rate mortgage?

A
It is higher at the beginning and decreases over time.
B
It is lower at the beginning and increases after a set period.
C
It remains the same throughout the term of the loan.
D
It can change over time based on market conditions.
6

Maximo is considering a mortgage with an escrow account. What does this account typically cover?

A
property taxes and homeowners insurance
B
monthly entertainment expenses
C
electric and water bills
D
vacation expenses
7

What does the interest rate in a mortgage determine?

A
the cost over time in addition to the principal amount borrowed
B
the amount of monthly rent
C
the cost of the house
D
the amount of money borrowed from the bank
8

Why is the debt-to-income ratio (DTI) significant when applying for a mortgage?

A
It sets the maximum amount a lender can charge for a mortgage.
B
It indicates whether a borrower can manage mortgage payments along with other debts.
C
It determines the amount of interest a borrower will pay over the loan term.
D
It shows the borrower's creditworthiness based on payment history.
9

How much total interest is paid in the first two payments of the loan?

A
1 dollars comma 664 point 8 7
B
1 dollars comma 663 point 8 7
C
723 point 0 5 dollars
D
2 dollars comma 387 point 9 2
10

What is the total payment (principal plus interest) for the third installment? Enter your answer in the box.

Answer:

1193.96

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Home Ownership — Quiz Answers — Financial Math