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Questions and Answers
An unamortized loan involves paying a balloon payment at the end of the term.
An unamortized loan involves paying a balloon payment at the end of the term.
True (A)
A loan that is negatively amortized means that the monthly payments decrease over time.
A loan that is negatively amortized means that the monthly payments decrease over time.
False (B)
A fully amortized loan requires level monthly payments that cover both principal and interest.
A fully amortized loan requires level monthly payments that cover both principal and interest.
True (A)
Partially amortized loans involve paying off the principal amount entirely by the end of the term.
Partially amortized loans involve paying off the principal amount entirely by the end of the term.
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A 15-year loan repayment period typically involves paying less interest compared to a 30-year loan.
A 15-year loan repayment period typically involves paying less interest compared to a 30-year loan.
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The length of the repayment period of a loan does not affect the monthly payment amount.
The length of the repayment period of a loan does not affect the monthly payment amount.
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An adjustable-rate mortgage (ARM) maintains a fixed interest rate throughout the loan term.
An adjustable-rate mortgage (ARM) maintains a fixed interest rate throughout the loan term.
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A lower loan-to-value ratio indicates less risk for the lender.
A lower loan-to-value ratio indicates less risk for the lender.
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The lender underwrites a loan only when mortgage insurance is not required.
The lender underwrites a loan only when mortgage insurance is not required.
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Both parties share the risk of interest rate fluctuations in an adjustable-rate mortgage (ARM).
Both parties share the risk of interest rate fluctuations in an adjustable-rate mortgage (ARM).
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