#1
Which of the following is a common type of mortgage?
All of the above
ExplanationVarious types including fixed-rate, adjustable-rate, and FHA loans are common in the mortgage market.
#2
What is the down payment when buying a house?
A portion of the total purchase price paid upfront by the buyer
ExplanationInitial payment made by the buyer to secure the purchase of the property.
#3
What is a home inspection?
An assessment of the property's structural condition and systems
ExplanationExamination of a property's physical condition and functionality.
#4
What is the purpose of a home warranty?
To cover the cost of repairs or replacements for certain home systems and appliances
ExplanationContract providing repair or replacement coverage for specified home components.
#5
What is the typical length of a mortgage loan term in the United States?
30 years
ExplanationStandard duration for repayment of a mortgage loan in the US.
#6
What does APR stand for in the context of home loans?
Annual Percentage Rate
ExplanationIndicator of the yearly cost of a mortgage, including interest and other fees.
#7
What is private mortgage insurance (PMI)?
Insurance protecting the lender in case the borrower defaults
ExplanationPolicy that protects the lender if the borrower fails to repay the loan.
#8
What is the role of a title search in the home buying process?
To ensure there are no outstanding liens or claims on the property
ExplanationInvestigation to verify the property's legal ownership and any associated encumbrances.
#9
What does PITI stand for in the context of mortgage payments?
Principal, Interest, Taxes, Insurance
ExplanationBreakdown of components included in a typical mortgage payment.
#10
What is the purpose of a pre-approval letter in the home buying process?
To show the seller that the buyer is serious and financially capable of purchasing the property
ExplanationDocument indicating a lender's commitment to provide a loan up to a certain amount.
#11
What is the debt-to-income ratio used for in mortgage lending?
To assess the borrower's ability to repay the loan
ExplanationMeasure of a borrower's monthly debt payments relative to their income.
#12
What is an escrow account in the context of a mortgage?
An account where property taxes and insurance payments are held and paid by the lender
ExplanationFunds held by a third party to cover expenses such as taxes and insurance.
#13
What is the difference between a mortgage broker and a loan officer?
Mortgage brokers work for lenders, while loan officers work for borrowers
ExplanationBrokers connect borrowers with lenders, while loan officers work directly for lending institutions.
#14
What is the difference between a deed and a title?
A deed is proof of ownership, while a title is a legal document showing ownership rights
ExplanationDeed is evidence of property transfer, while title establishes ownership rights.