Amortization

What type of mortgage payment is most common today?

• Fully-amortizing payments
• Interest-only payments
• Balloon payments
• Adjustable-rate payments

What is the purpose of a fully-amortizing mortgage payment?

• To gradually pay off the loan over time
• To only pay interest and not the principal
• To have a large final payment that pays off the balance
• To adjust the monthly payment based on interest rate changes

What is the main advantage of a fully-amortizing mortgage payment?

• The payments are lower in the early years
• The loan can be paid off quickly
• The total interest paid is minimized
• The monthly payment stays the same

What strategy can homeowners use to pay off their mortgage more quickly?

• Making extra monthly payments
• Refinancing to a lower interest rate
• Switching to an interest-only payment plan
• Negotiating a shorter loan term

Which of the following is NOT a benefit of paying off a mortgage faster?

• Saving money on interest
• Building home equity more quickly
• Reducing the overall loan term
• Lowering monthly payments

Why might a homeowner choose to pay off their mortgage more slowly, even if they can afford to pay it off faster?

• To maintain a certain monthly cash flow
• To maximize the tax benefits of mortgage interest
• To have more money available for other investments
• All of the above

How do fully-amortizing mortgage payments typically change over the life of the loan?

• They increase gradually
• They decrease gradually
• They stay the same
• They fluctuate based on interest rates

What does a fully-amortizing mortgage payment ensure?

• It pays off the loan over its term
• It increases the loan amount
• It allows for interest-only payments
• It requires no payments until the end

Which of the following best describes the term 'amortization'?

• The process of paying off a debt over time
• The increase in property value
• The interest rate applied to a loan
• The total amount borrowed

Why might a homeowner want to pay off their mortgage quickly?

• To reduce overall interest paid
• To increase their credit score
• To qualify for a second mortgage
• To avoid property taxes