Podcast
Questions and Answers
A homeowner anticipates rising income and prefers lower initial mortgage payments. Which type of mortgage would best suit this scenario?
A homeowner anticipates rising income and prefers lower initial mortgage payments. Which type of mortgage would best suit this scenario?
- Graduated Payment Mortgage (correct)
- Standard fixed-rate mortgage
- Adjustable-rate mortgage (ARM)
- Balloon mortgage
Which of the following mortgage types would likely involve the highest degree of payment shock at some point during the loan term?
Which of the following mortgage types would likely involve the highest degree of payment shock at some point during the loan term?
- Fixed-rate mortgage
- Construction mortgage
- Blanket mortgage
- Graduated Payment Mortgage (correct)
Which of the following describes the primary function of a mortgage?
Which of the following describes the primary function of a mortgage?
- A legal agreement where a lender takes title of property as a condition that the conveyance of title becomes void upon payment of debt. (correct)
- A method for consumers to access high value financial markets.
- A type of insurance policy protecting against property damage.
- A method for a bank to avoid property taxes.
A developer is building a new subdivision with multiple homes. Which type of mortgage would they likely use to finance the entire project?
A developer is building a new subdivision with multiple homes. Which type of mortgage would they likely use to finance the entire project?
Which of the following scenarios accurately describes the use of a construction mortgage?
Which of the following scenarios accurately describes the use of a construction mortgage?
What is the primary difference between a standard mortgage and a graduated payment mortgage?
What is the primary difference between a standard mortgage and a graduated payment mortgage?
Which mortgage type is most likely to be used for a short-term financing need, such as building a custom home?
Which mortgage type is most likely to be used for a short-term financing need, such as building a custom home?
What is the underlying principle that makes a mortgage a secured loan?
What is the underlying principle that makes a mortgage a secured loan?
How does a 'balloon' mortgage differ from a standard amortizing mortgage?
How does a 'balloon' mortgage differ from a standard amortizing mortgage?
What is a potential risk associated with a Graduated Payment Mortgage (GPM)?
What is a potential risk associated with a Graduated Payment Mortgage (GPM)?
Flashcards
Graduated Payment Mortgage
Graduated Payment Mortgage
A type of fixed-rate mortgage where payments start low and gradually increase to a desired level.
Mortgage
Mortgage
A legal agreement where a bank lends money and takes title of the debtor's property as security. The title becomes void when the debt is paid.
Study Notes
- A graduated payment mortgage is a type of fixed-rate mortgage where payments increase gradually from an initial low level to a desired, final level.
- A mortgage is a legal agreement where a bank lends money in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon payment of the debt.
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