WorksheetsL10 Day 3 Mortgages
Total questions: 15
Worksheet time: 8mins
What is the main characteristic of a 30-year fixed mortgage?
The interest rate changes every year
The loan is paid off in 15 years
The interest rate stays the same for 30 years
The monthly payment amount changes frequently
Which statement best describes a 15-year fixed mortgage compared to a 30-year fixed mortgage?
It has lower monthly payments but higher total interest
It is paid off in half the time and has higher monthly payments but less total interest
It is paid off in twice the time and has lower monthly payments
It has the same monthly payments and total interest as a 30-year loan
Why do you pay less in interest overall with a 15-year fixed mortgage compared to a 30-year fixed mortgage?
The loan amount is smaller
The interest rate is higher
The loan term is shorter
The monthly payments are lower
Why do 15-year loans usually have lower interest rates than 30-year loans?
Because they are less risky for banks
Because they are more expensive for banks to offer
Because they require a higher down payment
Because they are only available to first-time homebuyers
Who ends up paying less total money back to the bank for the same $200,000 loan, Mila with a 30-year loan or Ivan with a 15-year loan?
Ivan with a 15-year loan
Mila with a 30-year loan
Both pay the same amount in total
It depends on the monthly payment
What does the '5' in a 5/1 Adjustable Rate Mortgage (ARM) represent?
The number of years the interest rate is fixed
The number of times the rate can change
The number of payments per year
The percentage of the initial interest rate
Which statement best describes how the interest rate changes in a 5/1 ARM after the first five years?
The interest rate can change every year based on the economy
The interest rate remains fixed for the next five years
The interest rate changes every month
The interest rate is set by the borrower
Select all features that apply to a 5/1 Adjustable Rate Mortgage (ARM).
It is a 30-year loan
The interest rate is fixed for the first five years
The interest rate can change every year after the first five years
The interest rate is fixed for the entire loan period
In a 5/1 ARM, what determines the interest rate after the initial fixed period?
The state of the economy
The borrower's credit score
The original loan agreement
The number of payments made
What does 'ARM' stand for in the context of home loans?
Adjustable Rate Mortgage
Annual Rate Mortgage with fixed interest
Affordable Residential Mortgage
Automatic Rate Modification
In a 5/1 ARM, what does the first number (5) represent?
The number of years the interest rate remains fixed
The number of times the rate changes each year
The number of months between rate changes
The total number of payments required
In a 5/1 ARM, what does the second number (1) represent?
How often the interest rate changes after the fixed period
The number of years the loan lasts
The number of months the rate is fixed
The total number of rate changes
If a loan is called a 7/6 ARM, what does the '6' mean?
The interest rate changes every 6 months after the fixed period
The interest rate is fixed for 6 years
The loan lasts for 6 years
The payment is due every 6 months
Which of the following best describes how the numbers in an ARM loan name (like 5/1 or 7/6) are used?
The first number is the length of the fixed rate period, and the second number is how often the rate changes after that.
The first number is the total number of payments, and the second number is the interest rate percentage.
The first number is the down payment required, and the second number is the loan term in years.
The first number is the number of borrowers, and the second number is the number of lenders.
If a 10/1 ARM is offered, how long is the interest rate fixed before it starts adjusting?
10 years
1 year
10 months
1 month
