Mortgage Knowledge Quiz
What is a mortgage?
- A mortgage is a type of loan used to purchase a property.
What does the term "Amortization" mean in context of mortgages?
- Amortization refers to the process of gradually reducing the debt by making regular payments over a set period.
What does LTV stand for in mortgage terms?
- LTV, or Loan To Value, is a ratio showing the size of a mortgage in relation to the value of the property.
What is a fixed-rate mortgage?
- A fixed-rate mortgage has an interest rate that remains the same for the lifetime of the loan.
What is a down payment?
- A down payment is the initial upfront portion that you pay when you buy a home.
What is Private Mortgage Insurance (PMI)?
- PMI is insurance that a borrower may need to purchase if they offer a down payment that is less than 20% of the home’s purchase price.
What is a "principal" in a mortgage?
- The principal is the total amount of money borrowed or the amount still owed on a loan apart from the interest.
What is an Adjustable Rate Mortgage (ARM)?
- An Adjustable Rate Mortgage (ARM) has an interest rate that changes periodically, typically in relation to an index.
What is refinancing in relation to a mortgage?
- Refinancing a mortgage means paying off the existing loan and replacing it with a new one.
What is a "term" in a mortgage?
- The term is the length of time over which a borrower agrees to pay back their loan. It is typically 15 or 30 years.
