Mortgage Types and Characteristics Quiz
Test your knowledge on mortgages with questions covering fixed rates, LTV ratios, PMI, jumbo loans, FHA, escrow, ARMs, and more!
#1
Which type of mortgage has a fixed interest rate for the entire term of the loan?
Adjustable-rate mortgage (ARM)
Balloon mortgage
Fixed-rate mortgage
Interest-only mortgage
#2
What does PMI stand for in the context of mortgages?
Private Mortgage Insurance
Principal Mortgage Interest
Property Maintenance Inspection
Public Mortgage Investment
#3
What is the role of a mortgage broker in the home loan process?
To provide legal advice to both parties
To evaluate the property's market value
To act as an intermediary between borrowers and lenders
To conduct property inspections
#4
Which government-sponsored enterprise (GSE) is responsible for purchasing and securitizing mortgages in the United States?
Freddie Mac
Fannie Mae
Ginnie Mae
Sallie Mae
#5
What is the loan-to-value (LTV) ratio?
The ratio of the loan amount to the borrower's income
The ratio of the loan amount to the appraised value of the property
The ratio of the loan amount to the property taxes
The ratio of the loan amount to the interest rate
#6
What is the maximum loan-to-value (LTV) ratio typically allowed for a conventional mortgage?
#7
What is a 'jumbo' mortgage?
A mortgage with a high down payment requirement
A mortgage for luxury properties exceeding the conforming loan limits
A mortgage with a variable interest rate
A mortgage with a very short term
#8
What is the purpose of an escrow account in a mortgage?
To hold the title deed of the property
To facilitate communication between the lender and borrower
To manage and disburse property-related expenses such as taxes and insurance
To provide additional collateral for the loan
#9
Which of the following is a characteristic of an interest-only mortgage?
Monthly payments cover both principal and interest
Monthly payments only cover the interest portion of the loan
The interest rate remains fixed for the entire loan term
It is typically used for short-term financing
#10
What is a 'prepayment penalty' in the context of mortgages?
A fee charged for making payments before the scheduled due date
A penalty for paying off the loan before a specified period
A fee imposed for late payments
A charge for increasing the monthly payment amount
#11
Which of the following statements about FHA loans is true?
They are only available to veterans.
They require a minimum credit score of 750.
They are insured by the Federal Housing Administration.
They are primarily for high-income borrowers.
#12
Which of the following statements about a reverse mortgage is true?
Borrowers make monthly payments to the lender.
It is typically available to young homeowners.
The borrower receives payments from the lender, and the loan is repaid upon the borrower's death or when the home is sold.
It is suitable for homeowners with high income and excellent credit.
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