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Final exam mortgages

Authored by Lorenzo D'Auria

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KG - Professional Development

Final exam mortgages
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10 questions

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1.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which of the following is NOT a common reason people get a mortgage?

Buy a house

Renovate a house

Build out a house

Refinance an existing mortgage

Answer explanation

People do not get a mortgage to BUILD OUT. They do to BUY OUT a property 😀

2.

MULTIPLE SELECT QUESTION

5 mins • 1 pt

What is the role of a mortgage broker?

Provide advisory services to borrowers

Distribute financial products

Suggest the product that would pay the highest commission

Facilitate the borrower's interaction with different stakeholders

Answer explanation

In the EU, brokers are prohibited by law to maximise their profit in spite of the borrower's benefit.

Hence, they always have to favour the borrower's interest.

3.

MULTIPLE SELECT QUESTION

5 mins • 1 pt

Which of the following are NOT risk metrics?

APRC

LTV

DTI

FSMA

Answer explanation

The APRC is a cost metric taking into account all costs associated with a loan (interest, commissions, servicing)!

The FSMA is the Belgian financial market authority!

4.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

A Buy Out CAN BE the combination of which mortgage operations?

Buy and Refinance

Buy and Build

Renovate and Refinance

Build and Refinance

Answer explanation

A Buy Out can the combination of a purchase (Buy) and a refinance operation!

Check the minute 7:35 of the video lecture Mortgage 101 for more info.

5.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which items are taken into consideration for the calculation of the APRC?

Interest, Insurance costs, Service fees, Taxes

Interest and taxes

Interest and Service fees

Insurance costs, Taxes, Service fees

Answer explanation

See video Mortgage 101 from minute 12:30

6.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

What does APRC stands for?

Annual Percentage Rate Cost

Average Percentage Rate of Charge

Annual Percentage Rate of Charge

Average Percentage Rate Cost

7.

MULTIPLE SELECT QUESTION

5 mins • 1 pt

What does the DTI measure?

Overall risk of the mortgage

How many existing credits the borrower has

The creditworthiness of the borrower

How much negative cash flow can be handled by the borrower's positive cash flow

Answer explanation

The DTI measures the creditworthiness of the borrower.

It's a ratio of the borrowers's liabilities (negative cash flows) and incomes (positive cash flows).

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