Chapter 14 Quiz

1. In terms of a lowest down payment possible, which of the following loan plans provides the best feature to accomplish this?

A. VA loan

B. conventional loan

C. conventional loan with PMI

D. FHA loan

2. When FHA approves a loan,

A. FHA then lends the money directly to the purchaser.

B. FHA then sets the interest rate to be charged.

C. FHA then determines how the points will be dispersed between the buyer and seller.

D. FHA then determines the required down payment based on the appraisal value.

3. Which of the following types of mortgages would most likely require private mortgage insurance (PMI)?

A. FHA loan with purchaser putting 3 percent down

B. conventional loan with purchaser putting 10 percent down

C. VA loan with purchaser putting 3 percent down

D. New Jersey Housing and Mortgage Finance Agency loan with a purchaser putting 4 percent down

4. Federal income tax regulations allow a homeowner to reduce his or her taxable income by amounts paid for

A. repairs and maintenance.

B. hazard insurance premiums.

C. real estate taxes.

D. principal and interest.

5. The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the

A. amortization ratio.

B. loan-to-value ratio.

C. debt-to-equity ratio.

D. capital-use ratio.

6. A real estate loan payable in periodic installments that are sufficient to pay the principal in full during the term of the loan is called a(n)

A. conventional loan.

B. straight loan.

C. participation loan.

D. amortized loan.

7. A lender may protect its interest in a mortgage loan by obtaining additional security from

A. private mortgage insurance.

B. title insurance.

C. the borrower's note.

D. impound accounts.

8. When preparing his annual income tax return, the homeowner may be able to deduct all of the following EXCEPT

A. real estate taxes.

B. mortgage interest on a first home.

C. mortgage interest on a second home.

D. mortgage interest on a third home.

9. A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

A. A fully amortized loan

B. A straight loan

C. A partially amortized loan

D. An accelerated loan

10. A mortgage loan requires monthly payments of $175.75 for 20 years and a final payment of $5,095. This type of a mortgage loan is a(n)

A. wraparound mortgage.

B. accelerated mortgage.

C. balloon mortgage.

D. variable mortgage.