Chapter 13:
Consuming Activity
1) A mortgage
whose periodic payments are only sufficient to cover the interest due is know
as a interest-only mortgage.
a. True
b. False
2) Graduated
payment mortgage is a residential mortgage structure whose payments begin above
the fixed rate.
a. True
b. False
3) Adjustable
rate mortgage is a variable rate or payment mortgage that periodically adjusts
to a specified index.
a. True
b. False
4) Points are
loan charges designed to boost the lender’s effective rate of return.
a. True
b. False
5) An
origination fee is the loan charges that are designed to cover the lender’s
costs of processing the application and loan.
a. True
b. False
6) The best
mortgage type for a retired homeowner looking for income is known as a
_________.
a.
Adjustable rate mortgage
b. Partially
amortizing mortgage
c. Reverse
annuity mortgage
d. None of
the above
7) The increase
in the outstanding mortgage balance that arises in some ARMs and GPMs when
periodic payments are less than the interest due for the period and the
shortfall is added to the principal balance is know as _________.
a. Negative amortization
b. Partially
amortizing mortgage
c. RAM
d. APR
8) The _______
is the lender’s true yield once points and others fees are considered.
a. Commensurability
b. APR
c. Point
balance
d. None of
the above
Answers: 1)T 2)F
3)T 4)T
5)T 6)C 7)A 8)B
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