#1
Which of the following is a common type of mortgage?
Both a and b
ExplanationFixed-rate and adjustable-rate mortgages are common types.
#2
What does LTV stand for in real estate finance?
Loan to Value
ExplanationLTV is a ratio representing the loan amount compared to the property value.
#3
Which entity typically provides mortgage loans?
All of the above
ExplanationBanks, credit unions, and mortgage companies are common providers.
#4
What is Private Mortgage Insurance (PMI) used for?
To protect the lender in case of default
ExplanationPMI safeguards the lender if the borrower defaults on the loan.
#5
What is a balloon mortgage?
A mortgage where monthly payments are initially low but a lump sum is due at the end
ExplanationInitial lower payments with a final lump sum payment characterize balloon mortgages.
#6
What is the primary purpose of a real estate appraisal?
To estimate the market value of a property
ExplanationAppraisals assess property value for lenders and buyers.
#7
In real estate finance, what does the term 'amortization' refer to?
The process of decreasing the loan balance over time through periodic payments
ExplanationGradual reduction of loan balance via scheduled payments defines amortization.
#8
What does PITI stand for in real estate finance?
Principal, Interest, Taxes, Insurance
ExplanationPITI represents the components of a typical mortgage payment.
#9
What is a prepayment penalty in a mortgage loan?
A fee charged if the borrower pays off the loan early
ExplanationPenalty fees are imposed for early mortgage loan payoffs.
#10
What is a collateralized mortgage obligation (CMO)?
A security backed by a pool of mortgage loans
ExplanationCMOs are securities supported by bundled mortgage loans.
#11
What is a mortgage-backed security (MBS)?
A security backed by a pool of mortgage loans
ExplanationMBS are securities supported by grouped mortgage loans.
#12
What is the difference between a mortgage broker and a mortgage lender?
A broker connects borrowers with loans, while a lender provides loans directly to borrowers
ExplanationBrokers facilitate loan connections, whereas lenders offer loans directly.