Chapter 10

1. An overall cap is?

a. A Limit on the amount of money you can borrow
b. A ceiling on the interest rate change over the life of a mortgage.
c. The appropriate type of hat to wear with overalls
d. Both a and c

2. Which of the following is a situation in which a higher underwriting ratio would be justified?

a. Applicant has good future earnings potential
b. Applicant is paying a large down payment
c. Applicant has a good track record
d. All of the above

3. Which of the following should you bring with you to a meeting with a mortgage originator?

a. Three months of pay stubs
b. A resume and good appearance
c. Socket wrenches
d. Both a and b

4. T/F Prequalification is a firm commitment by a lender to give you a mortgage

5. T/F A penalty occurs if you do not pay off your mortgage early

6. T/F A motrgage point equals one percent of the loan amount

7. T/F With an ARM if interest rates rise your mortgage can end up costing you an arm and a leg.

8. T/F A hybrid mortgage starts off as an ARM and ends up like a regular mortgage

1)b, 2)d, 3)d, 4)F, 5)F, 6)T, 7)T, 8)F