#1
What is the primary purpose of a mortgage?
To buy a car
To invest in stocks
To purchase real estate
To fund a vacation
#2
What is a jumbo mortgage?
A mortgage for luxury homes with high-interest rates
A mortgage for small-sized properties
A mortgage exceeding the conforming loan limits set by government-sponsored enterprises
A mortgage with a short-term repayment period
#3
What is the primary advantage of an adjustable-rate mortgage (ARM)?
Stable and predictable monthly payments
Fixed interest rate for the entire loan term
Potential for lower initial interest rates
Longer loan repayment periods
#4
What does the term 'principal' refer to in the context of a mortgage?
The interest charged on the loan
The initial loan amount borrowed
The monthly mortgage payment
The property's appraised value
#5
What is the significance of the down payment in a mortgage transaction?
It determines the interest rate on the loan
It is a fee paid to the real estate agent
It represents the initial payment made by the borrower towards the property purchase
It covers the closing costs
#6
Which type of mortgage has a fixed interest rate for the entire loan term?
Adjustable-rate mortgage (ARM)
Interest-only mortgage
Fixed-rate mortgage
Balloon mortgage
#7
What does LTV stand for in the context of mortgages?
Loan to Value
Lowest Term Variation
Long-Term Valuation
Lien to Value
#8
What is a prepayment penalty in the context of mortgages?
A fee charged for paying off the mortgage early
An additional interest rate for late payments
A penalty for not having a down payment
A charge for property appraisal
#9
What does the term 'escrow' refer to in the mortgage process?
The mortgage interest rate
A legal document outlining the mortgage terms
A third-party account to hold funds for taxes and insurance
The final step in the mortgage approval process
#10
What is the debt-to-income ratio, and how does it relate to mortgage approval?
It measures the borrower's total debt compared to their income, impacting loan eligibility
It calculates the monthly mortgage payment
It assesses the property's value
It determines the interest rate on the mortgage
#11
In a mortgage, what is private mortgage insurance (PMI) used for?
To protect the lender in case of borrower default
To cover property taxes
To provide life insurance for the borrower
To fund home repairs
#12
What is an amortization schedule in the context of mortgages?
A list of property tax payments
A schedule for repaying the loan principal and interest over time
A timeline for refinancing a mortgage
A plan for investing mortgage payments in the stock market
#13
What is the key difference between a conventional mortgage and an FHA loan?
The lender's credit score requirements
The loan amount limits
The interest rates
The repayment period
#14
What is the purpose of the Truth in Lending Act (TILA) in the mortgage industry?
To regulate property appraisals
To ensure fair lending practices and transparency in loan terms
To establish the minimum down payment requirement
To control interest rates on mortgages
#15
What is a reverse mortgage primarily designed for?
Home improvement projects
Senior citizens to convert home equity into cash
Short-term real estate investments
Refinancing existing mortgages