Mortgage Basics Quiz

What does APR stand for when it comes to mortgage rates?

• Annual Property Revenue

• Annual Percentage Rate

• Adjusted Principal Return

• Average Payment Ratio

Tags

CCSS.7.RP.A.3

What are the two basic types of mortgages?

• Fixed-rate and Variable-rate

• Stable-rate and Flexible-rate

• Secure-rate and Adjustable-rate

• Constant-rate and Fluctuating-rate

What is the main difference between fixed-rate and adjustable-rate mortgages?

• The stability of the interest rate

• The initial payment amount

• The type of property eligible

• The length of the loan term

What is amortization in the context of a mortgage?

• The assessment of property value

• The process of loan approval

• The calculation of property taxes

• The breakdown of loan repayment into regular installments

In a fixed-rate mortgage, what happens to the monthly payment over time?

• It is adjusted annually based on the index

• It increases as the interest rate fluctuates

• It decreases as the outstanding balance decreases

• It stays the same for the entire term of the loan

What is the main risk associated with adjustable-rate mortgages?

• The limitation on property types eligible

• The requirement for a large down payment

• The potential for the interest rate to increase over time

• The complexity of the application process

How is the interest portion of a monthly mortgage payment calculated?

• Based on the borrower's credit score and income level

• Based on the property value and the loan term

• Based on the type of property and location

• Based on the outstanding balance and the annual interest rate

Tags

CCSS.7.RP.A.3

What happens to the allocation of monthly payments towards interest and principal over time in a mortgage?

• The portion towards interest decreases while the portion towards principal increases

• Both portions remain constant throughout the loan term

• The portion towards principal increases while the portion towards interest decreases

• The portion towards interest increases while the portion towards principal decreases

Tags

CCSS.8.EE.C.7B

What is the total amount of payments made on a $150,000 loan after 25 years, based on the given example?

• Exactly $150,000

• Less than $100,000

• Over $213,000

• Around $180,000

Tags

CCSS.HSF.BF.A.2

What is emphasized as crucial for individuals considering a mortgage?

• Understanding of mortgage products, honesty about personal finances, and clarity about life situation

• High credit score, large down payment, and stable income

• Multiple properties, diverse investment portfolio, and high-risk tolerance

• Minimal research, quick decision-making, and reliance on lender advice