Chapter 13 Consuming Activity

1. (ARM) stands for Adjustable rate mortgage

A. True
B. False

2.  Points; is a loan charge designed to boost the lender’s effective rate of return. Also know as discount points.

A. True
B. False

3. (RAM) is a loan charge designed to cover the lender’s costs of processing the application and loan.

A. True
B. False

4. (APR) stand for Adjustable percentage rate.

A. True
B. False

5. One of critical concerns people have when selecting a home is school district

A. True

B. False

6.                   A mortgage product designed to meet the needs of elderly homeowners by providing an annuity or line of credit secured by a mortgage to be paid off when the house is sold or refinanced or the estate probated.

A. Points
B. Adjustable rate mortgage
C. Reverse annuity mortgage
D. None of the above

7.                   A mortgage whose periodic payments are only sufficient to cover the interest due. There is no periodic amortization. The loan is paid off at maturity with a single payment called a balloon payment.
A. ARM
B. APR
C. RAM
D. None of the above

8. _____ The increase in the outstanding mortgage balance that arises in some ARM and GPM when periodic payments are less than the interest due for the period and the shortfall is added to principal balance.

A.  Commensurability

B. Negative amortization
C. A&B
D. None of the above

Answers: 1) A, 2) A, 3) B, 4) B, 5) A, 6) C, 7) D, 8) A