What is a balloon mortgage? O A mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period. O A type of adjustable rate mortgage where the interest balloons up later in the loan term. O A mortgage with a large prepayment penalty. O A mortgage where the principal increases throughout the term "AKA Ballooning"

What is a balloon mortgage? O A mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period. O A type of adjustable rate mortgage where the interest balloons up later in the loan term. O A mortgage with a large prepayment penalty. O A mortgage where the principal increases throughout the term "AKA Ballooning"

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 5FPE: Changes in mortgage principal and interest over time. Explain how the composition of the principal...

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Which of the following statements is not true about mortgages? O The ending balance of an amortized loan contract will be zero. O If the payment is less than the interest due, the ending balance of the loan will decrease. Mortgages are examples of amortized loans. O Every payment made toward an amortized loan consists of two parts-interest and repayment of principal.
A mortgage that allows the borrower to pay less than the interest due for a few year (A) negative-amortization mortgage.. B credit-default swap. C) traditional, thirty-year fixed-rate mortgage. D "liar loan".
Which of the following is true when the mortgage loan is an amortizing loan? a. At the beginning of the term of the loan the largest part of the payment is a paydown of principal, but a payments progress a rising portion is applied to interest payments. b. Interest payments and paydown of principal remain constant during the loan. c. At the beginning of the term of the loan the largest part of the payment is interest, but a payments progress a rising portion is applied to the paydown of principal. d. Paydown of principal occurs at the end of the loan. e. None of the above.
Which of the following statements is not true about mortgages? The ending balance of an amortized loan contract will be zero. Mortgages are examples of amortized loans. Mortgages always have a fixed nominal interest rate. The payment allocated toward principal in an amortized loan is the residual balance-that is, the difference between total payment and the interest due.
Which of the following statements is not true about mortgages? The ending balance of an amortized loan contract will be zero. O Mortgages are examples of amortized loans. The payment allocated toward principal in an amortized loan is the residual balance-that is, the difference between total payment and the interest due. Mortgages always have a fixed nominal interest rate.
All of these have a balloon payment due at the end of the loan term EXCEPT a.a fully amortized loan. b.a term/straight loan. c.a partially amortized loan. d.an interest-only loan.
(Note, this is how mortgage payments are calculated.) Payments on a loan are amortized when a fixed amount is paid at the end of each time period in order to pay off both the principle of the loan and the interest accumulated up to that point. At the end of each period, interest is charged on the amount still owing. Let P be the initial amount of the loan, and i > 0 be the interest rate charged (per period), R the size of the per period payment (paid at the end of each period), and Pt the amount that is still owed after t periods. So P0 = P(a) Find P1.(b) Find a first order linear recurrence for Pt.(c) Show that the solution to your recurrence relation isPt = (P-(R/i))(1+i)^t + (R/i)
In a reverse mortgage there are significant monthly principal and interest payments. Question 7 options: True False
Assume that there is no prepayment. Based on the following loan information on the fully-amortized fixed rate mortgages, What is the APR of Loan C? (choose the closest answer) Financial Calculator 1 ; Financial Calculator 2 ; Loan Amount Maturity Contract interest rate Upfront fees Upfront mortgage insurance fee APR 6.7% O 6.5% O 6.6% O 7.4% Loan C $200,000 30 years 6.25% 3% 1.6%
Which of the following is subject to change over the life of an adjustable-rate mortgage loan? a.Initial rate b.Margin c.Note rate d.Annual and life of loan caps
Which of the following is not included in the MHE, or PITI, payment? O Principal O Points O Interest O Insurance Taxes For a fixed rate mortgage: O the PITI payment stays the same over the life of the loan. O the mortgage payment, or principal plus insurance, stays the same over the life of the loan. O the mortgage payment, or principal plus interest, stays the same over the life of the loan. O no part of the payment stays the same over the life of the loan; only the interest rate stays the same over the life of the loan,
With a Fixed-Rate Mortgage, the bears the interest rate risk and with an Adjustable Rate Mortgage or ARM, the bears the interest rate risk. O A. borrower; lender O B. borrower; borrower O C. lender; lender O D. lender; borrower OE. federal government; pool organizer