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Introduction to the Mortgage Market Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Which of the following is NOT true about a mortgage?

Question 2 2. Which of the following is true concerning mortgages?

Question 3 3. When a bank takes back a home from a borrower for non-payment, it is referred to as _____.

Question 4 4. Which of the following statements is true?

Question 5 5. Which of these is a common mortgage component?

Page 2

Question 6 6. How is your reverse mortgage amount calculated?

Question 7 7. What happens to your home ownership with a regular mortgage?

Question 8 8. What happens if you move from your house with a reverse mortgage?

Question 9 9. What happens if you can't pay back the reverse mortgage?

Question 10 10. Which of the following people would benefit the most from a reverse mortgage?

Page 3

Question 11 11. Which of the following statements regarding moral hazard is true?

Question 12 12. A moral hazard is a situation where a person or business _____.

Question 13 13. Which of the following statements regarding moral hazard is true?

Question 14 14. A moral hazard is _____.

Question 15 15. Moral hazards result when _____.

Page 4

Question 16 16. In U.S. real estate lending, why did lenders offer lower interest rates following the housing market crash of 2007-2008?

Question 17 17. In U.S. real estate lending, which ratio do lenders use to evaluate borrowers for the total amount of debt they will have with any potential mortgage?

Question 18 18. In U.S. real estate lending, which of the following was the approximate range of mortgage loan interest rates in the 1980's?

Question 19 19. In U.S. real estate lending, which of the following items would be a cause for concern for a lender reviewing a borrower's application in today's market?

Question 20 20. In U.S. real estate lending, which information does a lender need to verify to approve a loan?

Page 5

Question 21 21. Which of the following is an example of a 'benchmark rate' that could be used in an ARM?

Question 22 22. What does the acronym ARM stand for?

Question 23 23. What is the primary benefit for the borrower and the bank of a fixed-rate mortgage?

Question 24 24. What do the numbers mean in an adjustable-rate mortgage quote, for example, a '3/1 ARM?'

Question 25 25. What kind of mortgage requires a 'balloon' payment at the end of the loan equal to the entire principal of the original loan?

Page 6

Question 26 26. Which of the following people would benefit most from a variable rate mortgage versus an adjustable rate mortgage?

Question 27 27. When interest rates are low, what kind of mortgage is more popular?

Question 28 28. What happens to the monthly payments for a variable rate mortgage when interest rates go higher?

Question 29 29. What happens with the monthly payments for an adjustable rate mortgage when interest rates go higher?

Question 30 30. When are variable and adjustable rate mortgages more popular than fixed rate mortgages?

Introduction to the Mortgage Market Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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