Understanding Mortgages

What distinguishes a mortgage from other types of loans?

• It can only be used for educational purposes.

• It has a lower interest rate.

• It does not require a down payment.

• The purchased home serves as collateral.

What is the minimum down payment percentage typically required by banks for a mortgage?

• 5%

• 10%

• 20%

• 15%

What type of interest rate did Mark and Lisa choose for their mortgage?

• Fixed rate

• Interest-only rate

• Variable rate

• Adjustable rate

What is the main advantage of choosing a fixed rate for a mortgage?

• It is always lower than variable rates.

• It remains the same, providing stability.

• It fluctuates with market rates.

• It decreases over time.

How long is Mark and Lisa's amortization period for their mortgage?

• 50 years

• 40 years

• 30 years

• 20 years

What happens to Mark and Lisa's equity in their home as they make mortgage payments?

• It fluctuates with market values.

• It increases.

• It remains the same.

• It decreases.

If Mark and Lisa sell their home for $600,000 shortly after purchasing it, how much profit do they make on their initial $100,000 investment?

• $100,000

• $200,000

• $300,000

• $400,000

Why might someone prefer to take out a mortgage instead of renting?

• To build equity over time

• To have a variable monthly payment

• To immediately own the home outright

• To avoid paying interest