C2U12 Real Estate Financing Flashcards
A loan covering more than one property would be a:
a. compound loan
b. blanket encumbrance
c. subordinated loan
d. reverse mortgage
b. blanket encumbrance
What type of mortgage has compound interest?
a. reverse mortgage
b. renegotiable-rate mortgage
c. adjustable-rate mortgage
d. straight mortgage
a. reverse mortgage
The difference between the interest rate of an index and the rate charged by a lender under an adjustable-rate mortgage is known as the:
a. discount
b. gap
c. margin
d. cap
c. margin
A lender who believes interest rates will be rising significantly will be LEAST interested in:
a. a hybrid mortgage
b. a 30-year fixed-rate mortgage
c. a 15-year fixed-rate mortgage
d. an adjustable-rate mortgage
b. a 30-year fixed-rate mortgage
A danger that an adjustable-rate mortgage poses to a buyer is:
a. higher payments if interest rates increase
b. a longer payment period if interest rates increase
c. the the margin will increase
d. none of these
a. higher payments if interest rate increases
An adjustable-rate loan index is 6% at the time the loan is made. The margin for the loan is 2 1/2%. With a 5% lifetime cap, the highest the interest rate could go is:
a. 6%
b. 8 1/2%
c. 11%
d. 13 1/2%
d. 13 1/2%
A convertible ARM is a loan that can be changed to:
a. a shorter-term loan
b. a fixed-rate loan
c. another property
d. another borrower
b. a fixed-rate loan
A buyer intends to sell a house within 2 years. The buyer would prefer:
a. a loan with no repayment penalty.
b. a loan with low initial costs.
c. an assumable loan.
d. all of these
d. all of these
Which loan type is MOST likely to meet al the criteria of question 8?
a. Renegotiable-rate mortgage
b. Adjustable-rate mortgage
c. Fixed-rate mortgage
d. Reverse mortgage
b. Adjustable-rate mortgage
An expansionary policy of the Federal Reserve would be to:
a. lower taxes.
b. increase the discount rate.
c. buy government securities.
d. raise bank reserve requirements.
c. buy government securities
