Mortgages Explained Video & Quiz

What does APR stand for?

• Annualized Payment Requirement

• Adjusted Principal Rate

• Automated Payment Rate

• Annual Percentage Rate

How does the APR differ from the interest rate?

• There is no difference

• APR is only used for short-term loans

• APR includes additional costs

• APR is always lower

Which type of mortgage has an interest rate that changes over time?

• Adjustable-rate mortgage

• Interest-only mortgage

• Balloon mortgage

• Fixed-rate mortgage

What is the main advantage of a fixed-rate mortgage?

• Interest rate changes with the market

• Shorter loan term

• Lower initial interest rate

• Monthly payments remain the same

What is a key factor to consider when choosing between a fixed-rate and an adjustable-rate mortgage?

• The loan officer's advice

• Your financial risk tolerance

• The color of your house

• Your favorite interest rate

What can cause the monthly payment of an adjustable-rate mortgage to change?

• Changes in the borrower's credit score

• Fluctuations in the stock market

• Variations in the economy's interest rates

• The phase of the moon

What does an amortization schedule show?

• The total interest paid over the loan term

• How each payment is split between interest and principal

• The increase in property value over time

• The remaining balance after each payment

What happens to the interest portion of a mortgage payment over time?

• It remains the same

• It decreases

• It fluctuates daily

• It increases

Why is it important to understand mortgage products before signing?

• To avoid legal issues

• To prevent financial misunderstandings

• All of the above

• To ensure the best interest rate

Over the term of a 25-year fixed-rate mortgage, how does the allocation of your payment between interest and principal change?

• More towards interest at the start, more towards principal at the end

• More towards principal at the start, more towards interest at the end

• Evenly split throughout the term

• Randomly varies each month