Housing

In an amortized mortgage loan _____________

• most of your monthly payment goes to principal at first, then an increasing fraction goes to interest over time

• most of your monthly payment goes to interest at first, then an increasing fraction goes to principal over time

• your monthly payment is divided equally between interest and principal

• your monthly payment mostly goes toward interest for the entirety of the loan term

• your monthly payment mostly goes toward principal for the entirety of the loan term

Other things being equal, what is the relationship between the APR that a home buyer qualifies for and the monthly payment she will have to pay on mortgage loan?

• the higher the APR, the lower the monthly payment

• the lower the APR, the higher the monthly payment

• the lower the APR, the lower the monthly payment

• there isn't necessarily a relationship between the APR and the monthly payment

Given the same principal and same APR, a 15 year mortgage loan will require a ______ monthly payment ________ total interest paid over the term of the loan compared to a 30 year mortgage loan.

• higher; but less

• lower; but more

• higher; and more

• lower; and less

In general, the higher a borrower's credit score (i.e. the more creditworthy s/he is), the ______ the APR s/he will be charged on her mortgage loan.

• higher

• lower

As a rule of thumb, financial advisors recommend spending no more than _____ of one's total income on housing costs, including utilities.

• 10%

• 30%

• 50%

• 5%

Financial advisors recommend renting over buying if the price to annual rent ratio is greater than _______

• 5

• 10

• 15

• 20

• 25

When buying a home, financial advisors recommend making a down payment of at least _______ of the purchase price.

• 5%

• 1%

• 20%

• 40%

• 50%

What "adjusts" in an adjustable rate mortgage loan?

• the interest rate

• the loan term

• the down payment

• the principal

• the home value

If you have an adjustable rate mortgage and interest rates in the economy rise, __________.

• your home value will fall

• your monthly payment will increase

• your total loan cost will fall

• your outstanding principal will rise

• more of your monthly payment will go towards principal