Deck 14: Mortgages

Question 1

Real estate loans made by private lenders that are not FHA-insured or VA-guaranteed are called ____________________ mortgages.

Answer 1

conventional

Question 2

____________________ are the expenses incurred in conjunction with the sale of real estate.

Answer 2

Closing costs

Question 3

A(n) ____________________ is any loan in which real property is used as security for a debt.

Answer 3

mortgage

Question 4

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Prepare an amortization schedule for the first 3 payments of an $87,000 mortgage at $5 \frac { 3 } { 4 } \%$ for 30 years. Find the loan balance after 3 payments.

A) $83,855.24
B) $86,725.08
C) $86,274.99
D) $85,345.15

Question 5

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Leandro has a mortgage of $89,000 at $8 \frac { 1 } { 2 } \%$ for 25 years. Find the total interest.

A) $106,143.00
B) $136,085.80
C) $126,202.00
D) $191,961.60

Question 6

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Roberto has a mortgage of $89,500 at $8 \frac { 1 } { 2 } \%$ for 20 years. Find the total interest.

A) $99,502.31
B) $103,201.28
C) $96,946.40
D) $97,855.68

Question 7

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Lyle has a mortgage of $96,000 at $7 \frac { 3 } { 4 } \%$ for 30 years. Find the total interest.

A) $151,795.20
B) $88,986.00
C) $247,795.20
D) $105,689.60

Question 8

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Vannesa has a mortgage of $92,000 at $5 \frac { 1 } { 2 } \%$ for 20 years. Find the total interest.

A) $65,869.78
B) $55,922.85
C) $53,700.25
D) $59,910.40

Question 9

A(n) ____________________ is the limit on the amount the interest rate can increase on an ARM.

Question 10

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.
Refer to Narrative in your text 14-1. Find the total interest for a mortgage of $112,500 at 6% for 30 years.

A) $130,500.00
B) $243,000.00
C) $125,876.54
D) $241,393.60

Question 11

Conventional loans are made by private lenders and generally have a(n) ____________________ interest rate than either FHA or VA loans.

Question 12

ARM stands for ____________________.

Question 13

A meeting at which the buyer and seller of real estate conclude all matters pertaining to the transaction is called a(n) ____________________.

Question 14

A home ____________________ loan is a lump-sum second mortgage loan made on the available equity in a home.

Question 15

____________________ is the process of paying off a financial obligation in a series of equal regular payments.

Question 16

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Find the total interest for a mortgage of $96,500 at $6 \frac { 3 } { 4 } \%$ for 25 years.

A) $99,000.00
B) $103,544.50
C) $125,876.54
D) $241,393.60

Question 17

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Ursula has a mortgage of $82,000 at $6 \frac { 3 } { 4 } \%$ for 25 years. Find the total interest.

A) $73,468.80
B) $87,986.00
C) $81,362.00
D) $101,689.60

Question 18

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Prepare an amortization schedule for the first 2 payments of a $97,000 mortgage at $3 \frac { 3 } { 4 } \%$ for 20 years. Find the loan balance after 2 payments.

A) $96,696.87
B) $96,727.92
C) $96,454.98
D) $96,849.50

Question 19

Mortgage discount ____________________, added to the cost of a mortgage, allow the lender to increase the yield without showing an increase in the mortgage interest rate.

Question 20

An account used by mortgage lenders for the safekeeping of the funds accumulating to pay next year's property taxes and hazard insurance is called a(n) ____________________ account.

Question 21

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Amber takes out a $72,000 mortgage at $7 \frac { 1 } { 2 } \%$ for 25 years. Prepare an amortization schedule for the first 3 months. Find the loan balance after 3 payments.

A) $71,752.22
B) $70,966.67
C) $68,948.27
D) $69,895.36

Question 22

You are purchasing a home for $220,000. The down payment is 30% and the balance will be financed with a 20-year mortgage at 9% and 2 discount points. You put down a deposit of $5,000 (applied to the down payment) when the sales contract was signed. You also have these expenses: credit report, $70; appraisal fee, $110; title insurance premium, 1% of amount financed; title search, $225; and attorney's fees, $600. Find your amount due at the closing.

A) $66,625
B) $78,912
C) $10,314
D) $58,655

Question 23

Lisa bought a home with an adjustable-rate mortgage. The margin on the loan is 4.2% and the rate cap is 5.75% over the life of the loan. If the current index rate is 6.6%, what is the calculated interest rate of the ARM?

A) 9.5%
B) 10.8%
C) 6.75%
D) 12.5%

Question 24

A house is selling for $190,000. A deposit of $10,000 was made when the sales contract was signed. The down payment is 25% and the balance will be financed with a 25-year mortgage at 9% and 3 discount points. If the sellers are responsible for the broker's commission (6% of the purchase price); $1,250 in other closing costs; and the existing mortgage, with a balance of $70,000; what proceeds will they receive on the sale of the property?

A) $118,750
B) $125,380
C) $107,350
D) $94,840

Question 25

A house is selling for $150,000. A deposit of $20,000 was made when the sales contract was signed. The down payment is 30% and the balance will be financed with a 25-year mortgage at 4.25% and 4 discount points. If the sellers are responsible for the broker's commission (6% of the purchase price); $1,300 in other closing costs; and the existing mortgage, with a balance of $40,000; what proceeds will they receive on the sale of the property?

A) $108,700.00
B) $99,700.00
C) $101,000.00
D) $69,450.00

Question 26

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Find the monthly PITI Payment for Weezer based on a mortgage of $96,000 at a rate of $7 \frac { 1 } { 2 } \%$ for 20 years with annual property taxes and hazard insurance premium of $1,750 and $858 respectively.

A) $991.09
B) $849.92
C) $974.75
D) $1,059.59

Question 27

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.
Refer to Narrative in your text 14-1. You purchase a home for $69,750 at 6.75% for 30 years. The property taxes are $2,450 per year, and the hazard insurance premium is $256 semiannually. Find the monthly PITI payment.

A) $699.51
B) $594.73
C) $1,059.40
D) $246.83

Question 28

You bought a home with an adjustable-rate mortgage. The margin on the loan is 5.4% and the rate cap is 6.25% over the life of the loan. If the current index rate is 7%, what is the calculated interest rate of the ARM?

A) 10.5%
B) 12.4%
C) 11.65%
D) 9.75%

Question 29

You are interested in purchasing a home listed at $120,000. The down payment is 30% and the balance will be financed with a 20-year mortgage at 9% and 3 discount points. You put down a deposit (applied to the down payment) of $15,000 when you signed the sales contract. You also have these expenses: credit report, $80; appraisal fee, $100; title insurance premium, 1% of amount financed; title search, $175; and attorneys fees, $600. Find your amount due at the closing.

A) $22,795.00
B) $24,475.00
C) $25,315.00
D) $10,315.00

Question 30

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Lynn has a mortgage of $55,000 at $6 \frac { 3 } { 4 } \%$ for 20 years. The property taxes are $1,900 per year, and the hazard insurance premium is $780 per year. Find the monthly PITI payment.

A) $641.88
B) $528.33
C) $731.67
D) $495.86

Question 31

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Prepare an amortization schedule for Betty after the first payment of a $55,000 mortgage at $9 \frac { 1 } { 2 } \%$ for 30 years. Find the loan balance after the first payment.

A) $54,972.87
B) $54,855.79
C) $54,782.92
D) $54,390.60

Question 32

Marjorie bought a home with an adjustable-rate mortgage. The margin on an adjustable-rate mortgage is 2.5% and the rate cap is 7% over the life of the loan. If the current index rate is 5.9%, what is the calculated interest rate of the ARM?

A) 9.4%
B) 8.4%
C) 10.5%
D) 7%

Question 33

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Shellie has a mortgage of $56,500 at $5 \frac { 1 } { 2 } \%$ for 25 years. The property taxes are $350 quarterly, and the hazard insurance premium is $239.50 semiannually. Find the monthly taxes and insurance payment.

A) $358.75
B) $290.79
C) $422.87
D) $156.58

Question 34

Marta purchased a home with an adjustable rate mortgage. The margin on an adjustable-rate mortgage is 5.5% and the rate cap is 6.5% over the life of the loan. If the current index rate is 8.9%, find the maximum overall rate of the loan.

A) 19.7%
B) 18.5%
C) 19.2%
D) 20.9%

Question 35

The margin on an adjustable-rate mortgage is 5.5% and the rate cap is 6.55% over the life of the loan. If the current index rate is 6.25%, what is the calculated interest rate of the ARM?

A) 11.0%
B) 11.75%
C) 9.25%
D) 12.2%

Question 36

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.
Refer to Narrative in your text 14-1. Garrison takes out a $62,500 mortgage at 6% for 15 years. Prepare an amortization schedule for the first 3 months. Find the loan balance after 3 payments.

A) $61,851.77
B) $61,872.89
C) $61,936.76
D) $62,003.24

Question 37

Fredrick bought a home with an adjustable-rate mortgage. The margin on an adjustable-rate mortgage is 3.5% and the rate cap is 5.25% over the life of the loan. If the current index rate is 7.9%, what is the calculated interest rate of the ARM?

A) 11.4%
B) 9.9%
C) 11.5%
D) 8.6%

Question 38

Narrative 14-1
For problems in this section, use Table 14-1 from your text to find the monthly mortgage payments, when necessary.

-Refer to Narrative in your text 14-1. Tanyarita has a mortgage of $67,500 at $8 \frac { 1 } { 2 } \%$ for 20 years. The property taxes are $2,900 semiannually, and the hazard insurance premium is $150 quarterly. Find the monthly taxes and insurance payment.

A) $725.11
B) $383.42
C) $425.00
D) $533.33

Question 39

You are purchasing a home for $340,000. The down payment is 25% and the balance will be financed with a 25-year mortgage at 8% and 1 discount points. You put down a deposit of $10,000 (applied to the down payment) when the sales contract was signed. You also have these expenses: credit report, $80; appraisal fee, $140; title insurance premium, 1% of amount financed; title search, $300; and attorney's fees, $850. Find your amount due at the closing.

A) $340,000
B) $81,470
C) $81,170
D) $57,655

Question 40

Scott is purchasing a home for $220,000. The down payment is 30% and the balance will be financed with a 15-year mortgage at 8% and 4 discount points. Scott made a deposit of $10,000 when the sales contract was signed. If the sellers are responsible for the broker's commission (6% for the purchase price); $1,250 in other closing costs; and the existing mortgage, with a balance of $55,000; what proceeds will they receive on the sale of the property?

A) $150,550.00
B) $163,750.00
C) $151,800.00
D) $69,450.00

Question 41

Suppose you earn a gross income of $2,580 per month and apply for a mortgage with a monthly PITI of $830.76. You have other financial obligations totaling $118.68 per month. If the lending ratio guidelines are as given in the table below, what type of mortgage, if any, would you qualify for? $$\begin{array} { | l | l | l | } \hline \text { Mortgage Type } & \text { Housing Expense Ratio } & \text { Total Obligations Ratio } \\\hline \text { FHA } & 29 \% & 41 \% \\\hline \text { Conventional } & 28 \% & 36 \% \\\hline\end{array}$$

A) Both FHA and Conventional
B) Conventional only
C) Neither FHA nor Conventional
D) FHA only

Question 42

Using Table 14-1 from your text, calculate the required information for the following mortgage, rounding to the nearest cent.

Question 43

Yara owns a home that was recently appraised for $189,000. The balance on the existing mortgage is $84,450. If Yara's bank is willing to loan up to 75% of the appraised value, find the potential amount of credit available on a home equity loan.

A) $55,682
B) $48,395
C) $56,124
D) $57,300

Question 44

Carlos owns a home that was recently appraised for $132,000. The balance on the existing mortgage is $73,700. If Carlos's bank is willing to loan up to 75% of the appraised value, find the potential amount of credit available on a home equity loan.

A) $69,300.00
B) $133,000.00
C) $25,300.00
D) $52,700.00

Question 45

A mortgage applicant who has a monthly gross income of $2,780 applies for a mortgage with a monthly PITI of $689.44. The applicant's other financial obligations total $405.88 per month. If the lending ratio guidelines are as given in the table below, what type of mortgage, if any, would the applicant qualify for? $$\begin{array} { | l | l | l | } \hline \text { Mortgage Type } & \text { Housing Expense Ratio } & \text { Total Obligations Ratio } \\\hline \text { FHA } & 29 \% & 41 \% \\\hline \text { Conventional } & 28 \% & 36 \% \\\hline\end{array}$$

A) Neither FHA nor Conventional
B) Both FHA and Conventional
C) FHA only
D) Conventional only

Question 46

Your home was recently appraised for $179,000. The balance on your existing mortgage is $115,050. If your bank is willing to loan up to 70% of the appraised value, what is the potential amount of credit available on a home equity loan?

A) $125,300.00
B) $240,335.00
C) $53,700.00
D) $10,250.00

Question 47

Using Table 14-1 from your text, calculate the required information for the following mortgage, rounding to the nearest cent.

Question 48

You bought a home with an adjustable-rate mortgage. The margin on the loan is 4.3% and the rate cap is 5.75% over the life of the loan. If the current index rate is 7.25%, what is the calculated interest rate of the ARM?

A) 10.5%
B) 11.75%
C) 11.55%
D) 9.55%

Question 49

Using Table 14-1 from your text, calculate the required information for the following mortgage, rounding to the nearest cent.

Question 50

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 51

Erin Casey purchased a home with a $90,000 mortgage at 9 1/2% for 30 years. Calculate the monthly payment and prepare an amortization schedule for the first four months of Erin's loan.

Question 52

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 53

Suppose you earn a gross income of $2,730 per month and apply for a mortgage with a monthly PITI of $510.51. You have other financial obligations totaling $431.34 per month. (Use the ratio guidelines from your text) What type of mortgage, if any, would you qualify for?

A) FHA only
B) FHA and Conventional
C) Conventional only
D) None

Question 54

A mortgage applicant who has a monthly gross income of $4,770 applies for a mortgage with monthly PITI of $1,669.50. The applicant's other financial obligations total $281.43 per month. (Use the ratio guidelines from your text) What type of mortgage, if any, would the applicant qualify for?

A) FHA only
B) none
C) Conventional only
D) FHA and Conventional

Question 55

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 56

Using Table 14-1 from your text, calculate the required information for the following mortgage, rounding to the nearest cent.

Question 57

Using Table 14-1 from your text, calculate the required information for the following mortgage, rounding to the nearest cent.

Question 58

Evelynn has a home that was recently appraised for $127,000, and the balance on the existing mortgage is $88,350. If a bank is willing to loan up to 75% of the appraised value, calculate the potential amount of credit available on a home equity loan.

A) $2,550.00
B) $8,650.00
C) $6,900.00
D) $70,900.00

Question 59

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 60

Lucerne earns a gross income of $5,500 per month and applies for a mortgage with a monthly PITI of $1,244. Lucerne has other financial obligations totaling $829 per month. (Use the ratio guidelines from your text) What type of mortgage, if any, would Lucerne qualify for?

A) FHA only
B) FHA and Conventional
C) Conventional only
D) None

Question 61

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 62

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 63

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 64

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 65

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. Daniel Scher is financing an $86,200 mortgage at . He can finance for 20 years or 25 years. How much less will his monthly payment be if he chooses the 25 year mortgage?

Question 66

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 67

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. You have a mortgage of $79,000 at 6% for 20 years. Find the monthly payments and the total interest. Calculate total interest for your answer.

Question 68

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 69

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. The Coles purchased a home with a mortgage of $105,000 at for 30 years. The mortgage payments are $789.60 per month. What is the amount of total interest on this mortgage?

Question 70

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 71

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 72

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 73

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. Joe and Marcie Kerrigan are buying their first home. They are financing a $55,000 mortgage at for 30 years.

A)What is their monthly payment?
B)What is the total amount of interest that will be paid on this mortgage?

Question 74

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 75

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 76

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. You take out a $87,000 mortgage at 6% for 20 years. Prepare an amortization schedule for the first three months. Enter the loan balance after 3 payments as your answer.

Question 77

For the following second mortgage application, calculate the percentage of appraised value and the potential credit:

Question 78

For the following mortgage application, calculate the housing expense ratio and the total expense ratio, rounding to the nearest tenth of a percent.

Question 79

Calculate the monthly principal and interest (PI), using Table 14-1 from your text, and the monthly PITI for the following mortgage, rounding to the nearest cent.

Question 80

Narrative 14-2
For problems in this section, use Table 14-1 from your text to find monthly mortgage payments.
Refer to Narrative in your text 14-2. Find the monthly payment on a $96,200 mortgage at for 30 years. (Round to the nearest cent)