Question
QUESTION 1 A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 4 points. What is the effective
QUESTION 1
A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 4 points. What is the effective cost of borrowing rate on the loan if the loan is repaid after 10 years? (Choose the nearest number)
a. | 6.6% | |
b. | 7.4% | |
c. | 8.1% | |
d. | 6.2% |
QUESTION 2
A borrower has a 30-year fully amortizing mortgage loan for $200,000 with an interest rate of 6% and monthly payments. If she wants to pay off the loan after 8 years, what would be the outstanding balance on the loan?
a. | $84,886 | |
b. | $146,667 | |
c. | $91,246 | |
d. | $175,545 |
QUESTION 3
At the end of five years, calculating the loan balance of a constant payment mortgage is simply the:
a. | Present value of an ordinary annuity | |
b. | Future value of a single amount | |
c. | Future value of an ordinary annuity | |
d. | Present value of a single amount |
QUESTION 4
In comparison to the first months payment of a CAM, the first months payment of a CPM:
a. | Is higher | |
b. | Is lower | |
c. | Cannot be determined with this information | |
d. | Is the same |
QUESTION 5
A fully amortizing mortgage loan is made for $100,000 at 6% interest for 20 years. Assume the loan is repaid at the end of eight years. What will be the outstanding balance? (Choose the nearest value)
a. | $73,416.24 | |
b. | $89,256.55 | |
c. | $42,193.50 | |
d. | $68,777.28 |
QUESTION 6
A fully amortizing mortgage CPM loan is made for $100,000 at 12% interest for 30 years. Payments are to be made monthly. What would the breakdown of interest and principal be during month 20? (Choose the nearest value)
a. | 1010; 19 | |
b. | 994.; 35 | |
c. | 998; 31 | |
d. | 1029; 115 |
QUESTION 7
A borrower takes out a 30-year fully amortizing mortgage loan for $250,000 with an interest rate of 5% and monthly payments. What portion of the first months payment would be applied to interest?
a. | $694 | |
b. | $1,355 | |
c. | $1,042 | |
d. | $1,342 |
QUESTION 8
Which of the following is False?
a. | Borrowers with fixed rate mortgages generally benefit if actual inflation is higher than expected inflation. | |
b. | One difference between the constant amortizing mortgage (CAM) and the constant payment mortgage (CPM) is the interest paid and loan amortization relationship. | |
c. | Callable loans are callable at the borrowers option | |
d. | Lenders and investors worry about default, inflation, legislative, and liquidity risks. |
QUESTION 9
Assuming all APRs equal, the effective interest rate on a loan is highest when:
a. | Points are charged and the loan is paid off at maturity in 30 years | |
b. | The loan has no points and a 30 year maturity and is prepaid in five years | |
c. | The loan has no points and is prepaid at maturity | |
d. | Points are charged and the loan has a 30 year maturity but prepaid in five years |
QUESTION 10
A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 4 points. What is the effective cost of borrowing rate on the loan if the loan is carried for all 30 years?
a. | 6.4% | |
b. | 5.6% | |
c. | 6.6% | |
d. | 6.0% |
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