AFA Final Exam Study Guide

Paul is buying a house for $300,000. His down-payment is 10%. What will his down-payment be?

• $3000

• $30,000

• $33,000

• $60,000

In the beginning years of a mortgage, what is most of your payment going towards?

• The principal

• The interest

• The down payment

• The principal and interest

Fees associated with the process of securing a mortgage are called __________ costs. They can account for 3-5% of the mortgage.

• Mortgage

• Property

• Escrow

• Closing

Additional costs that include property tax and home insurance are called __________.

• Mortgage

• Property

• Escrow

• Closing

Who is the bank protecting when charging an escrow?

• Themselves

• The buyer

• The seller

• The county

This schedule shows you the breakdown of what you owe towards the principal vs what you owe towards the interest:

• Loan

• Interest

• Principal

• Amortization

If Jamal has a monthly payment of $1,750 for 30 years, how much will he have paid over the course of the loan?

• $1,750

• $52,500

• $630,000

• $975,000

If Jamal bought the house in the previous question for $360,000 - how much did he pay in interest over the life of the loan?

• $1,750

• $270,000

• $360,000

• $630,000

When Huan bought her house, the purchase price was $200,000. She was able to save $10,000 for the down-payment. What percentage of the purchase price did she put down?

• 1%

• 5%

• 10%

• 20%

In the monthly payment formula, there are several variables - one of which is "r." What does "r" stand for?

• Radical

• Reward

• Rate

• Range