Ch. 13 Questions by Jazmin Padilla

Ch. 13 Questions by Jazmin Padilla

1. Fifty to Sixty percent of a person's gross income should be committed to the mortgage of a home. 

2. A graduated payment mortgage (GPM) is a good option for someone who expects to increase their income each year as they progress in their career, an example being a recent college graduate. 

3. If a homeowner sells his or her home before positive amortization has offset the negative amortization, the seller owes more then they had initially borrowed. 

4. The intended purpose of the Adjustable rate mortgage (ARM) was to shift the risk from the lender to the borrower. 

5. The size of the loan depends on:

    a. price of the targeted home

    b. the down payment amount

    c. the origination fee

    d. both a and b

6. The purpose of a points is to increase the borrowers mortgage payments. 

7. The _____is the lenders true yield once points and other fees are calculated. 

    a. APR

    b. MRR

    c. Mortgage rate

    d. none of the above

8. If one strong characteristic can offset the weakness of another characteristic, then the concept of ______ should be used.

    a. commensurability

    b. heuristics

    c. recency

    d. RAM

Answers:

1. F

2. T

3. T

4. T

5. D

6. F

7. A

8. A