Understanding Loan Amortization Concepts

This tutorial by Eric Buck covers the math associated with amortization and loans, useful for licensing exams or as a refresher for brokers. It explains different loan types, with a focus on fixed-rate fully amortized loans, and details how to calculate loan payments using amortization tables and factors. The video also discusses the differences between banker and actual calendars in interest calculations, provides examples of loan payment calculations, and explains prepaid interest and points.

What is the primary focus of this tutorial?

• Legal aspects of real estate

• Math associated with amortization and loans

• Real estate marketing strategies

• Property management techniques

Which type of loan has a fixed interest rate throughout its term?

• Variable-rate loan

• Reverse mortgage

• Fixed-rate fully amortized loan

• Interest-only loan

In a fixed-rate fully amortized loan, what happens to the contribution to principal over time?

• It fluctuates randomly

• It decreases

• It remains constant

• It increases

What does the blue line represent in the graphical representation of loan payments?

• Loan balance

• Monthly payment amount

• Total principal paid

• Total interest paid

How is the amortization factor used in calculating monthly payments?

• It is multiplied by the loan amount

• It is divided by the loan term

• It is added to the interest rate

• It is subtracted from the principal

What is the amortization factor for a 30-year loan at 4.75%?

• 7.9079

• 4.5679

• 6.5996

• 5.216

How many days does a banker calendar assume for each month?

• 28 days

• 29 days

• 31 days

• 30 days

Using a banker calendar, how much interest is paid on a $250,000 loan at 5% over 60 days?

• $2,020.55

• $1,875.00

• $2,500.00

• $2,083.33

What is the effect of paying one point on a loan?

• Increases the loan term by 1 year

• Decreases the loan amount by 1%

• Decreases the interest rate by 1/8%

• Increases the interest rate by 1/8%