QUESTION 1 A 5/1 adjustable rate mortgage has affixed rate period for five years and then the rate can adjust once every year. O True O False QUESTION 2 A mortgage loan is a loan secured by real property. O True False QUESTION 3 Adjustable rate mortgages shift risk from the borrower to the lender. True O False QUESTION 4 Adjustable-rate mortgages, or ARMS, have monthly payments that can move up and down as interest rates in the market fluctuate. This is a risk to the borrower. True False 2.32558 points 2.32558 points 6.25 points 2.32558 points Save Answer Save Answer Save Answer Save Answer QUESTION 5 Base your answer on the following information: https://www.zillow.com/mortgage-rates/?auto=true&value=1599000&zip=11210#filters=10248&request=ZR-BPLKWMWP&purpose=Purchase"e=ZQ-YBNQDWJN This 5/1 ARM exposes the borrower to unlimited increases in interest rates as LIBOR increases. O True False QUESTION 6 Base your answer on the following information: https://www.zillow.com/mortgage rates/?auto=true&value=1599000&zip=11210#filters-10248&request-ZR-BPLKWMWP&purpose=Purchase"e=ZQ-YBNQDWJN Borrower fees paid at the origination of this mortgage are less than $500 because the interest rate risk is shifted from the lender to the borrower. O True O False QUESTION 7 Base your answer on the following information: https://www.zillow.com/mortgage The mortgage rate is on this 5/1 ARM is 225 basis points higher than the index until it reaches its lifetime cap. O True False rates/?auto-true&value=1599000&zip=11210#filters-10248&request-ZR-BPLKWMWP&purpose Purchase"e=ZQ-YBNQDWJN 6.66666 points 6.66666 points 6.66667 points Save Answer Save Answer Save Answer QUESTION 8 Base your answer on the following information: https://www.zillow.com/mortgage rates/?auto=true&value=1599000&zip=11210#filters=10248&request-ZR-BPLKWMWP&purpose=Purchase"e=ZQ-YBNQDWJN The rate on this 5/1 adjustable rate mortgage has no fixed period. The rate can adjust from the day you borrow the funds. O True O False QUESTION 9 Base your answer on the following information: https://www.zillow.com/mortgage-rates/?auto=true&value=1599000&zip=11210#filters=10248&request-ZR-BPLKWMWP&purpose=Purchase"e=ZQ-YBNQDWJN The APR is greater than the annual mortgage rate because the APR accounts for fees that must be paid. The fees paid will lower the PV (loan balance) and thus boosts the actual rate the borrower is paying. O True False 6.66666 points Save Answer 6.66666 points Save Answer QUESTION 10 Based on the Zillow mortgage calculator at https://www.zillow.com/mortgage calculator/ and the information in the problem please answer the following question; You can use the advanced calculator to find more details. Home price $300,000 Down payment $60,000 Loan program 30 Year Fixed Interest rate 3.5% Your monthly interest and principal payment will be $1,078. O True O False 3.44827 points Save Answer QUESTION 11 Based on the Zillow mortgage calculator at https://www.zillow.com/mortgage calculator/ and the information in the problem please answer the following question; You can use the advanced calculator to find more details. Home price $500,000 Down payment $20% Loan program 30 Year Fixed Interest rate 3.5% Your monthly interest and principal payment will be $1,597. O True False 3.44827 points Save Answer QUESTION 12 Based on the Zillow mortgage calculator at https://www.zillow.com/mortgage-calculator/ and the information in the problem please answer the following question; You can use the advanced calculator to find more details. Home price $300,000 Down payment 10% Loan program 15 Year Fixed Interest rate 3.5% Your monthly interest and principal payment will be $1,930. True O False QUESTION 13 Buying a home requires that the buyer has funds available for the down payment, mortgage application fees, the closing costs of the transaction, insurance premiums, and property appraisal O True O False 3.44827 points 3.44827 points Save Answer Save Answer QUESTION 14 Even if you default on your mortgage loan the lender can not begin foreclosure proceedings until the Federal government approves. O True O False QUESTION 15 If a borrower would like to lower his/her monthly mortgage payments he/she can make a larger initial down payment. O True O False QUESTION 16 If you buy a home all of your mortgage payments you make will increase the value of your equity in the home by that same amount. O True O False 4 points 2.32558 points 6.66667 points Save Answer Save Answer Save Answer QUESTION 17 If you finance the purchase of a home with a thirty-year fixed rate mortgage loan your equity in the property will build up at a faster rate during the first five years of the mortgage than from years 25-30 O True O False QUESTION 18 If you mortgage your home and then default on the mortgage loan the lender may be able to foreclose on your home. O True False QUESTION 19 Inflation reduces the real interest rate a borrower pays of the mortgage is a fixed rate mortgage. O True O False 3.44827 points 3.44827 points 2.32558 points Save Answer Save Answer Save Answer QUESTION 20 Mortgage rates are uniform and equal across all cities and counties in the United States. O True O False QUESTION 21 Use Bankrate Mortgage Calculator https://www.bankrate.com/mortgages/mortgage-calculator/ Home price $500,000 Down payment $20% Loan program 30 Year Fixed Interest rate 3.5% Your monthly interest and principal payment will be $1,597 O True O False 3.44827 points 3.125 points 4 Save Answer Save Answer QUESTION 22 What is the present value of the savings between a thirty-year mortgage that has an interest rate of 9% and one that has an interest rate of 10% ? (Assume that payments are made at the end of the year and assume a discount rate of 9 %). You must find the present value of the difference between the payments you would make on the 10% mortgage and the 9% mortgage. $17,964.31 O $16,765.32 $1,748.58 $52,457.40 QUESTION 23 You are going to buy a home for $500,000. You are trying to decide between a issuing a 30 year fixed rate mortgage or a 15 year fixed rate mortgage to finance 80% of the price. Your objective is to have lower montlhy payments. The interest rate on the 30 year loan is 4.24% and on he 15 year loan the interest rate is 3.365%. You should choose the 15 year loan. O True O False 2.32558 points 2.32558 points Save Answer Save Answer QUESTION 24 You are interested in buying a house that costs $300,000. You plan to make a 20% down payment and borrow 80% of the purchase price. You will issue a mortgage loan (yes, the borrower is the issuer of the mortgage loan) to the bank who is lending you the money. The term of the mortgage loan is 15 years. The interest rate is fixed at 5% per year. Let's assume yearly rather than monthly payments for this problem set. Keep in mind that your mortgage loan will be fully amortized (paid off) after the end of fifteen years. What are your total pretax monthly mortgage payments: Here are the Excel terms that you will need to calculate your pre-tax mortgage payments: rate: 5% nper:15 pv: $240,000 fv: 0 type: 0 O $17,890.10 O $23,122.15 O $5,868.05 O $22,345.16 O $17.254.10 QUESTION 25 You buy a home that has a price of $400,000. You finance the purchase by issuing a mortgage loan to Wells Fargo Bank for the amount of $320,000. You finance the $80,000 from money in your checking account. At the time you become the owner of the property (closing date of the transaction) your equity in the property is $80,000. O True O False 3.44827 points 3.125 points Save Answer Save Answer QUESTION 25 You buy a home that has a price of $400,000. You finance the purchase by issuing a mortgage loan to Wells Fargo Bank for the amount of $320,000. You finance the $80,000 from money in your checking account. At the time you become the owner of the property (closing date of the transaction) your equity in the property is $80,000. O True O False QUESTION 26 You have issued a 30 year a fixed rate mortgage loan to finance the purchase of a home. Interest rates decline every year for four years after you have issued the mortgage loan. You are now locked into paying an interest rate that is above the market rate. There is no way out of this financial contract until the maturity date of the mortgage (thirty years from origination). O True O False 3.125 points Save Answer 5 points Save Answer