Chapter 13 Questions

Chapter 13 Questions
By Michael McMinassian

1.)    The Interest-Only mortgage is a periodic payments are only sufficient to cover the interest due.

2.)     The ARM is a variable rate or payment mortgage that periodically adjusts to a specified index.

3.)    The Origination fee is the loan charges designed to cover the lender’s costs of processing the application and loan.   

4.)    The APR is the monthly interest payment.

5.)    The RAM targets older, retired people who already own a home free and clear of any mortgage and who need of income.

6.)    This is a residential mortgage structure whose payments begin below the fixed-rate, fully amortized mortgage payments but are systematically increased on a predetermined basis until later years the exceed the fully amortized payment.

                        A. Partially Amortizing Mortgage
                        B. Graduated Payment Mortgage
                        C. Interest-Only Mortgage
                        D. Negative Amortization

7.)  The __________ mortgage helps manage risk, this form was revived not as a means to  manage risk but rather as a method to reduce the size of mortgage payments and make loans affordable to a greater number of potential home buyers.

A. Interest-Only
B. Amortizing
C. Graduated Payment
D. Partially Amortizing

8.)  When making a choice between options, if for any given option, a weakness in some characteristics can be compensated for by strengths in other characteristics.

                  A. Commensurability
                  B. Characteristics
                  C. Building Envelope
                  D. Situs

KEY
1. T
2. T
3. T
4. F
5. T
6. B
7. A
8. A