Monday, April 30, 2012

Chapter 13 Consuming Activity


by Mario Jauregui

True or False
Mortgage payments are structured to pay down the debt over time and automatically build up equity.

T



True or False
With an interest-only mortgage there is no periodic amortization and the loan is paid off at maturity with a single payment called a balloon payment.

T




Multiple Choice
A mortgage product designed to meet the needs of elderly homeowners by providing an annuity or line of credit secured by a mortgage to be paid off when the house is sold or refinanced or the estate probated.
(A) Negative Amortization
(B) Revers Annuity Mortgage (RAM)
(C) Adjustable Rate Mortgage
(D) None of the Above

B



Multiple Choice
This is a variable rate payment that is not specifically designed to help the young first time home owner, it was designed to help the lender cope with purchasing power losses due to inflation.
(A) Annual Percentage Rate (APR)
(B) Adjustable Rate Mortgage (ARM)
(C) Negative Amortization
(D) Non of the above

B



True or False
Origination fees are charged to cover the lender’s costs of processing the application of the loan.

T



True or False
Negative amortization happens when the principal of the loan is reduced over time.

F: The principal of the loan actually increases due to the periodic payments being less for the period and the shortfall is then added to the principal



Multiple Choice
Lender’s true yield once points and other fees are considered. It is the lender’s IRR assuming the borrower holds the loan to maturity.
(A) Points
(B) Investment Value
(C) Graduated Payment Mortgage ( GPM)
(D) Annual Percentage Rate (APR)


D



True or False
Points are loan charges to lessen the lender’s effective rate of return. Also known as discount points.



F: These charges actually BOOST the lender’s effective rate of return

No comments:

Post a Comment