Joe and Jill each buy a house, and each take out a $100,000 loan. Joe takes out a conventional 30-year fixed rate mortgage, Jane opts for a conventional 15-year mortgage. Which of the following correctly summarizes how Joe's mortgage is different than Jane's?
a) Joe's 30-year mortgage has a higher interest rate, lower monthly payments and higher overall interest payments. It builds equity more slowly than Jane's mortgage.
b) Jane's 15-year mortgage has a higher interest rate, higher monthly payments and higher overall interest payments. It builds equity more slowly than Joe's mortgage.
c) Joe's 30-year mortgage has a lower interest rate, lower monthly payments and lower overall interest payments. It builds equity more quickly than Jane's mortgage.
Which of the following correctly describes the benefits of a 30-year fixed rate mortgage?
a) Borrowers can purchase a larger home by establishing smaller monthly payments over a longer term.
b) Borrowers can take advantage of lower monthly payments to invest at higher yields than home.
c) A higher interest bill increases the borrower’s tax deduction, potentially reducing or eliminating their federal income tax liability.
d) All of the above.
True or false: The interest rates of adjustable-rate mortgages (ARMs) move up or down as market rates fluctuate.
a) True
b) False
True or False: Adjustable-rate mortgages (ARMs) are favorable when rates are going up and your salary is going down.
TABLE OF CONTENTS
CHAPTER I Lesson 1 Quiz
CHAPTER II Lesson 2 Quiz
CHAPTER III Lesson 3 Lesson 4 Lesson 5 Quiz
CHAPTER IV Lesson 6 Lesson 7 Quiz
CHAPTER V Lesson 8 Lesson 9 Quiz
CHAPTER VI Lesson 10 Lesson 11 Quiz
CHAPTER VII Lesson 12 Lesson 13 Lesson 14 Quiz
CHAPTER VIII Lesson 15 Lesson 16 Lesson 17 Lesson 18 Quiz
CHAPTER IX Lesson 19 Quiz
CHAPTER X Lesson 20 Quiz
CHAPTER XI Lesson 21 Quiz
CHAPTER XII Lesson 22 Lesson 23 Lesson 24 Quiz
CHAPTER XIII Lesson 25 Lesson 26 Lesson 27 Quiz
CHAPTER XIV Lesson 28 Lesson 29 Lesson 30 Quiz Definitions
* Mortgage rate may include points. See rate tables for details. Click here. * To see the definition of overnight averages click here.
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