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%