#1
What is a common advantage of a fixed-rate mortgage?
Interest rate remains constant for the life of the loan
ExplanationStable interest rates throughout the loan duration
#2
What does APR stand for in the context of mortgage loans?
Annual Percentage Rate
ExplanationAnnualized cost of borrowing
#3
What is the typical term length for a standard mortgage loan?
30 years
ExplanationStandard duration for mortgage repayment
#4
Which of the following factors does NOT typically affect your credit score?
Marital status
ExplanationMarital status doesn't impact credit score
#5
What is the term for the initial payment made when buying a home, typically expressed as a percentage of the purchase price?
Down payment
ExplanationInitial payment at home purchase
#6
Which of the following is NOT a common type of mortgage interest rate?
Hybrid-rate
ExplanationNon-existent hybrid-rate mortgage
#7
What is the term for a loan where the borrower uses their home equity as collateral?
Home equity loan
ExplanationLoan backed by home equity
#8
What is typically the minimum credit score required to qualify for a conventional mortgage loan?
620
ExplanationBaseline credit score for eligibility
#9
What is a common feature of an adjustable-rate mortgage (ARM)?
Interest rate that changes periodically
ExplanationVariable interest rates over time
#10
What is the debt-to-income (DTI) ratio used for in mortgage lending?
To assess a borrower's ability to repay a loan
ExplanationEvaluation of repayment capability
#11
What is the purpose of a mortgage underwriting process?
To assess the borrower's creditworthiness
ExplanationEvaluation of borrower's credit reliability
#12
What is the Loan-to-Value (LTV) ratio used for in mortgage lending?
To determine the size of the down payment
ExplanationCalculation of down payment size based on property value
#13
What is private mortgage insurance (PMI) primarily designed to do?
Protect the lender in case of borrower default
ExplanationLender protection against default risk
#14
What is a jumbo mortgage?
A mortgage for a high-priced property that exceeds conforming loan limits
ExplanationLoan for expensive properties beyond standard limits
#15
In mortgage terms, what is a point?
A percentage of the loan amount paid upfront to reduce the interest rate
ExplanationUpfront payment to lower interest rate
#16
What is a balloon mortgage?
A mortgage with a large final payment after a set period
ExplanationLoan with hefty final payment
#17
In mortgage lending, what is a prepayment penalty?
A fee charged for paying off the mortgage early
ExplanationCharge for early mortgage repayment