#1
Which of the following is a common type of mortgage?
All of the above
ExplanationVarious mortgage types, including fixed-rate, adjustable-rate, and government-backed loans.
#2
What is Private Mortgage Insurance (PMI) used for?
To protect the lender in case the borrower defaults on the loan
ExplanationInsurance safeguarding lenders against borrower default.
#3
What does APR stand for in the context of mortgages?
Annual Percentage Rate
ExplanationComprehensive measure of the cost of borrowing over a year.
#4
Which of the following factors typically affects mortgage interest rates?
All of the above
ExplanationMultiple factors, including credit score, market conditions, and loan type, influence interest rates.
#5
What is the typical duration of a standard mortgage loan?
30 years
ExplanationCommon mortgage term spanning 30 years.
#6
What is the Loan-to-Value (LTV) ratio?
The ratio of the loan amount to the appraised value of the property
ExplanationPercentage comparison of the loan amount to property value.
#7
What is a mortgage escrow account used for?
To pay property taxes and insurance on behalf of the borrower
ExplanationAccount for managing property-related payments on behalf of the borrower.
#8
What is a mortgage point?
A fee paid to the lender to reduce the interest rate
ExplanationUpfront fee to lower the mortgage interest rate.
#9
What is the role of underwriting in the mortgage process?
To evaluate the risk associated with lending to a particular borrower
ExplanationAssessment of borrower risk to determine loan approval.
#10
What is a jumbo mortgage?
A mortgage for luxury properties that exceed conventional loan limits
ExplanationSpecialized mortgage for high-value properties.
#11
What is the difference between a conventional mortgage and an FHA loan?
FHA loans are insured by the government, while conventional mortgages are not
ExplanationGovernment-backed insurance distinguishes FHA loans.
#12
In the context of mortgage insurance, what does the term 'LPMI' stand for?
Lender-Paid Mortgage Insurance
ExplanationLender covers the cost of mortgage insurance.
#13
What is the purpose of a mortgage amortization schedule?
To track the remaining balance of the mortgage over time
ExplanationSchedule outlining how mortgage payments contribute to balance reduction.
#14
In the context of mortgage lending, what does 'PITI' stand for?
Principal, Interest, Taxes, Insurance
ExplanationCombined components of a mortgage payment.
#15
What is the role of the Federal Housing Administration (FHA) in mortgage lending?
To offer mortgage loans with low down payment requirements
ExplanationGovernment agency facilitating low down payment mortgage options.