Tuesday, May 14, 2013

Ch. 13 Questions- Jason Davies

1. (T/F). Points are loan charges designed to cover the lender's costs of processing the application and loan.

2. (T/F). The primary motivation behind refinding a residential mortgage is to reduce the cost of borrowing.

3. (T/F). Commensurability describes strengths that compensate for a weakness when making a decision between options.

4. (T/F). Real estate is typically the second-highest business expenditure behind personnel costs.

5. (T/F). Individual borrowers can optimize their interest rate-discount rate selection if they know the lender's payoff assumption and are able to accurately anticipate their own payoff.

6. Which of the following terms describes a loan balance that is not shrinking through amortization but instead growing?
a. Negative Amortization
b. Reverse Annuity Mortgage
c. Adjustable Rate Mortgage
d. Interest Only Mortgage

7. Which of the following type of mortgages are less and more affordable for a greater number of potential home buyers?
a. Partially Amortizing Mortgage
b. Graduated Mortgage Payment
c. Interest-only Mortgage
d. Adjustable Rate Mortgage

8. Which of the following is not a benefit of being a homeowner?
a. Property Tax Reductions
b. Interest and property tax deductions for federal income tax calculations
c. Attractive exposure to taxable capital gains
d. Reduced risk in the real estate market

1. F 2. T 3. T 4. T 5. T 6. a 7. c 8. d

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