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Mortgage Rate: Definition & Types

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What does the acronym ARM stand for?

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

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

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About This Quiz & Worksheet

This quiz/worksheet focuses on several key aspects of understanding mortgage rates, letting you see how ready you are to apply knowledge of the types of mortgages and relevant terms.

Quiz & Worksheet Goals

In this quiz/worksheet, you'll encounter questions dealing with:

  • Benchmark rates and ARM
  • The acronym ARM
  • A mortgage that requires 'balloon' payments
  • Fixed-rate mortgages

Skills Practiced

  • Distinguishing differences - ensure that you can accurately differentiate between the types of mortgages discussed in the lesson
  • Defining key concepts - make sure you can accurately identify what ARM stands for
  • Reading comprehension - see how well you've drawn important information from the lesson on the numbers of an adjustable-rate mortgage quote as well as benchmark rates that can be used in an ARM

Additional Learning

The lesson titled Mortgage Rate: Definition & Types is a great resource to learn more about these concepts and get information to meet the following objectives:

  • Describe interest and know its role in mortgages
  • Familiarize yourself with the federal funds rate
  • Define principal in the context of mortgages
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