General Principles Chapter 8

Question 1

Fixed Rate Mortgage

Answer 1

fixed over period of repayment

Question 2

Adjustable-Rate Mortgage

Answer 2

interest rates fluctuate wit interest rates. payments may change w interest rate

Question 3

Balloon Payment

Answer 3

unpaid balance paid off or refinanced

Question 4

SOFR

Answer 4

secured overnight financing rate, replaced LIBOR. benchmark rate used for ARM

Question 5

FHA

Answer 5

government insures loan through FHA

Question 6

VA

Answer 6

fha for veterans

Question 7

Mortgage Calc Steps - interest over the life of the loan

Answer 7

1. Calc Payments
2. Calculate Total Payments-principal

Question 8

1st year principal & interest

Answer 8

calculate total payments for first year
get interest amount from question, multiply by tax bracket to see what is deductible
pmtx12 calc - deductible amount = after tax pmt for first year