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WorksheetsMortgage Market
Total questions: 15
Worksheet time: 8mins
What is a mortgage?
is an unchanging rate charged on a liability, such as a loan or mortgage.
is a loan from a bank that a person can use to finance the purchase of a house.
The amount of money a person pays upfront on a loan/payment.
s a type of loan where the interest changes according to changes in market interest rates.
What is a variable rate?
is an unchanging rate charged on a liability, such as a loan or mortgage.
is a loan from a bank that a person can use to finance the purchase of a house.
The amount of money a person pays upfront on a loan/payment.
s a type of loan where the interest changes according to changes in market interest rates.
What is a Fixed rate?
is an unchanging rate charged on a liability, such as a loan or mortgage.
is a loan from a bank that a person can use to finance the purchase of a house.
The amount of money a person pays upfront on a loan/payment.
s a type of loan where the interest changes according to changes in market interest rates.
What incentive do banks have for lending money to homebuyers?
They expect homebuyers to default on their loans
They expect to profit from the interest of the loans
They expect to profit as the val of the home rises
They expect to profit when the home buyer sells her house
If you are unable to repay your mortgage, what is the most likely result?
The bank might sell your home to recover its investment
You might have to go to prison
The bank might force you to take out an additional loan
The bank might take all they money and goods you own
Which of the following will a bank consider in its decision to approve you for a mortgage?
Your ethnic background
Your religion
Your salary
Your hobbies
What can you infer from the fact that banks require a down payment on a mortgage?
They want to increase the amount of money they loan
They want to make sure the borrower will not walk away from the loan
They want to increase they amount of interest on the loan
They want to get their hands on as much cash as possible
What is one of the advantages to making a larger down payment?
You will need a smaller loan
You will need a bigger loan
You will need a higher interest rate
You will need a lower intererest rate
What is the most likely reason for borrowers to default on a mortgage?
They can't afford the down payment
They find another house they like better
They've built up enough equity to sell the house
They can no longer afford the monthly payments
Which of the following terms is not correctly matched with its definition?
Unsecured loan: no collateral is given in support of the loan.
Mortgage loan: the home serves as the collateral for the loan.
Secured loan: the collateral for the loan is a person’s good credit history and her signature on a loan agreement.
Adjustable rate mortgage: the mortgage rate can change several times over the life of the mortgage.
This the type of mortgage which the rate of interest may escalate or deescalate during the time of the loan is called.
Fixed Rate Mortgage
Graduated Payments Mortgage
Adjustable Rate Mortgage
This is the type of mortgage where the home buyer makes small payments at the beginning of the loan and larger payments at the end.
Fixed Rate Mortgage
Graduated Payments Mortgage
Adjustable Rate Mortgage
Which of the following is true of mortgage interest rates?
Mortgage rates are closely tied to Treasury bond rates, but mortgage rates tend to stay below Treasury rates because mortgages are secured with collateral.
Longer-term mortgages have higher interest rates than shorter-term mortgages.
Interest rates are higher on mortgage loans on which lenders charge points.
A loan-servicing agent will
package the loan for an investor.
hold the loan in their investment portfolio
collect payments from the borrower.
The ownership of mortgaged property will be transferred to financial institutions if the
borrower defaults
borrower does not default
borrower want less rate
borrower want profit
