Question 1

By far the most common adjustment period in an ARM is six months.

Accepted Answer

A) True 
 B)False

Question 2

It is possible for individuals to buy second lien notes.

Accepted Answer

A) True 
 B)False

Question 3

Under a construction loan, also called a(n)____________________ loan, money is advanced as construction takes place.

Accepted Answer

The answer of Under a construction loan, also called a(n)____________________...

Question 4

Equity mortgages are typically first lien mortgages that are used to tap the increase in equity resulting from rising home prices and first loan principal reductions.

Accepted Answer

A) True 
 B)False

Question 5

What feature in an adjustable rate mortgage protects the borrower against very large monthly payment increases?

Accepted Answer

A)  Index rate 
B)  Adjustment period 
C)  Interest rate cap 
D)  Margin 
A)  Index rate 
B)  Adjustment period 
C)  Interest rate cap 
D)  Margin

Question 6

Regulation Z requires creditors to state the maximum interest rate that an ARM loan may adjust to.

Accepted Answer

A) True 
 B)False

Question 7

The benefit of an ARM is that ARMs carry an initial interest rate that is lower than the interest rate on a fixed-rate mortgage of similar maturity.

Accepted Answer

A) True 
 B)False

Question 8

The type of ARM loan with an enticingly attractive below-market initial rate is called a ____________________ rate adjustable.

Accepted Answer

The answer of The type of ARM loan with an...

Question 9

Equity sharing provides that in return for providing financing, the lender wants to share in some of the benefits normally reserved for the equity holder.

Accepted Answer

A) True 
 B)False

Question 10

The interest rate on an ARM is tied to a(n)____________________ rate.

Accepted Answer

The answer of The interest rate on an ARM is...

Question 11

In a graduated payment mortgage, the graduated part is the

Accepted Answer

A)  interest rate. 
B)  monthly payment. 
C)  maturity date. 
D)  entire loan is graduated. 
A)  interest rate. 
B)  monthly payment. 
C)  maturity date. 
D)  entire loan is graduated.

Question 12

When monthly payments are not sufficient to pay the interest due and the difference is added to the loan balance, this is called ____________________ amortization.

Accepted Answer

The answer of When monthly payments are not sufficient to...

Question 13

A blended-rate loan arrangement is designed to

Accepted Answer

A)  raise the rate of interest to the buyer. 
B)  lower the sales price of the property. 
C)  attract buyers who are discouraged by high interest rates. 
D)  pay off a loan sooner. 
A)  raise the rate of interest to the buyer. 
B)  lower the sales price of the property. 
C)  attract buyers who are discouraged by high interest rates. 
D)  pay off a loan sooner.

Question 14

When considering a ARM loan, the lender must explain to the borrower, in writing, the

Accepted Answer

A)  worst-case scenario. 
B)  best-case scenario. 
C)  average-case scenario. 
D)  respective credit report. 
A)  worst-case scenario. 
B)  best-case scenario. 
C)  average-case scenario. 
D)  respective credit report.

Question 15

A contract for deed on residential property

Accepted Answer

A)  allows transfer of title to the purchaser at the inception of the mortgage. 
B)  transfers title to the purchasers at the fulfillment of the conditions of the mortgage. 
C)  does not provide for transfer of title. 
D)  requires the owner to occupy the property. 
A)  allows transfer of title to the purchaser at the inception of the mortgage. 
B)  transfers title to the purchasers at the fulfillment of the conditions of the mortgage. 
C)  does not provide for transfer of title. 
D)  requires the owner to occupy the property.

Question 16

Choose the one most appropriate answer for each.
-a mortgage wherein the lender extends a line of credit based on the amount of equity in a person's home

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Question 17

A ____________________ mortgage encompasses existing mortgages and is subordinate to them.

Accepted Answer

The answer of A ____________________ mortgage encompasses existing mortgages and...

Question 18

Choose the one most appropriate answer for each.
-a mortgage secured by two or more properties

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Question 19

A package mortgage involves several properties under the same mortgage.

Accepted Answer

A) True 
 B)False

Question 20

An elderly couple is "house rich, money poor". To obtain money now while still living in their magnificent home, they should look for a

Accepted Answer

A)  negative amortization. 
B)  an adjustable rate mortgage. 
C)  a reverse annuity mortgage. 
D)  a graduated payment mortgage. 
A)  negative amortization. 
B)  an adjustable rate mortgage. 
C)  a reverse annuity mortgage. 
D)  a graduated payment mortgage.

Exam 13: Types of Financing

By far the most common adjustment period in an ARM is six months.

It is possible for individuals to buy second lien notes.

Under a construction loan, also called a(n)____________________ loan, money is advanced as construction takes place.

Equity mortgages are typically first lien mortgages that are used to tap the increase in equity resulting from rising home prices and first loan principal reductions.

What feature in an adjustable rate mortgage protects the borrower against very large monthly payment increases?

Regulation Z requires creditors to state the maximum interest rate that an ARM loan may adjust to.

The benefit of an ARM is that ARMs carry an initial interest rate that is lower than the interest rate on a fixed-rate mortgage of similar maturity.

The type of ARM loan with an enticingly attractive below-market initial rate is called a ____________________ rate adjustable.

Equity sharing provides that in return for providing financing, the lender wants to share in some of the benefits normally reserved for the equity holder.

The interest rate on an ARM is tied to a(n)____________________ rate.

In a graduated payment mortgage, the graduated part is the

When monthly payments are not sufficient to pay the interest due and the difference is added to the loan balance, this is called ____________________ amortization.

A blended-rate loan arrangement is designed to

When considering a ARM loan, the lender must explain to the borrower, in writing, the

A contract for deed on residential property

Choose the one most appropriate answer for each. -a mortgage wherein the lender extends a line of credit based on the amount of equity in a person's home

A ____________________ mortgage encompasses existing mortgages and is subordinate to them.

Choose the one most appropriate answer for each. -a mortgage secured by two or more properties

A package mortgage involves several properties under the same mortgage.

An elderly couple is "house rich, money poor". To obtain money now while still living in their magnificent home, they should look for a

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