Question 21 (2.4 points)

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The amortization schedule of a mortgage shows:

Question 21 options:

	that the outstanding principal declines with each payment
	that the interest portion of the payment declines with each payment
	that the principal portion of the payment increases with each payment
	all of the above

Question 22 (2.4 points)

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When a borrower defaults, instead of foreclosure, the lender may allow the borrower to sell the house himself and use the proceeds to pay back the outstanding loan amount. This practice is called:

Question 22 options:

	short sale
	deed in lieu of foreclosure
	bankruptcy
	loan modification

Question 23 (2.4 points)

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Since conforming loans can be bought and sold by Fannie Mae and Freddie Mac, they carry a(n) ________ interest rate than comparable nonconforming loans

Question 23 options:

	lower
	higher
	equal
	more volatile

Question 24 (2.4 points)

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A disadvantage of using a home equity loan (HEL) as an alternative to a personal loan is that:

Question 24 options:

	only prime borrowers with high credit scores and low debt-to-income ratios can qualify for HELs
	a HEL often has a higher interest rate than a personal loan
	the lender can foreclose on the property used for collateral if the borrower defaults
	none of the above