Understanding Mortgages

What is a mortgage?

• A savings account for home repairs

• A government grant for first-time homebuyers

• A type of insurance policy

• A loan to buy or refinance a home

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What does it mean if a mortgage is 'secured'?

• It is backed by collateral, such as the home

• It has a fixed interest rate

• It is guaranteed by the government

• It has no interest rate

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What is included in a monthly mortgage payment?

• Principal, interest, and other fees

• Down payment

• Utility bills

• Renovation costs

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Who might need a co-signer for a mortgage?

• Someone with a high credit score

• A borrower with weak or no credit history

• Only first-time homebuyers

• Only those buying investment properties

What is PMI?

• Public Mortgage Interest

• Pre-Mortgage Inquiry

• Private Mortgage Insurance

• Personal Money Investment

What is the purpose of an escrow account in a mortgage?

• To collect and pay property taxes and homeowners insurance

• To store the down payment until closing

• To hold extra funds for home repairs

• To save for future home purchases

What is a conventional loan?

• A loan with no interest

• A government-backed loan

• A loan not insured by the federal government

• A loan only for military veterans

What does 'amortization' refer to in a mortgage?

• The assessment of late payment fees

• The calculation of property taxes

• The division of payments into interest and principal over the life of the loan

• The process of increasing the interest rate over time

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What is a fixed-rate mortgage?

• A mortgage with an interest rate that changes based on the market

• A mortgage with an interest rate that stays the same through the term

• A mortgage with a rate that increases after the first year

• A mortgage with a rate that decreases after five years

What might cause your monthly mortgage payment to change?

• Changes in property taxes or homeowners insurance if you have an escrow account

• A change in your credit score

• The phase of the moon

• Changing utility costs