Understanding Mortgages

What does the acronym P-I-T-I stand for in the context of mortgages?

• Principal, Interest, Tariffs, Insurance

• Principal, Interest, Taxes, Income

• Principal, Investment, Taxes, Insurance

• Principal, Interest, Taxes, Insurance

What is typically the largest and longest loan most people take out in their lives?

• Personal loan

• Car loan

• Student loan

• Home mortgage

What is the primary purpose of private mortgage insurance (PMI)?

• To cover property taxes

• To reduce the interest rate on the mortgage

• To protect the lender in case of borrower default

• To protect the homeowner from default

Which type of mortgage has an interest rate that never changes?

• Adjustable Rate Mortgage

• Fixed Rate Mortgage

• VA Loan

• FHA Loan

What is the minimum down payment required for an FHA loan?

• 0%

• 3.5%

• 20%

• 10%

Which type of loan is specifically for veterans and requires no down payment?

• FHA Loan

• VA Loan

• USDA Loan

• Conventional Loan

What does the '5' in a 5-1 ARM mortgage represent?

• The interest rate is fixed for 5 years

• The interest rate changes every 5 months

• The loan term is 5 years

• The interest rate changes every 5 years

What is the main benefit of a USDA loan?

• No property taxes

• Available for urban areas

• Low interest rates

• No down payment required

What is the primary factor that affects the interest rate on a mortgage?

• The location of the property

• The borrower's credit score

• The type of property

• The size of the house

What is the purpose of property taxes included in a mortgage payment?

• To reduce the principal amount

• To fund schools and infrastructure

• To pay for the mortgage interest

• To fund the homeowner's insurance