Which of the following mortgage types is generally considered the lowest risk?
A. Fixed-rate mortgage
B. Balloon-reset mortgage
C. Adjustable rate mortgage
That's correct. Typically a fixed-rate mortgage's monthly mortgage payment remains the same for the life of the loan.
That's incorrect. You must pay off the loan or exercise your reset option at the end of the term and you can not predict what the interest rate will be at that time.
That's incorrect. The interest rate for an adjustable rate mortgage can change during the life of the loan.
Which of the following is NOT included as part of your monthly mortgage payment?
A. Principal
B. Interest
C. Home maintenance fund
D. Private mortgage insurance (PMI)
That's correct. A home maintenance fund is not part of your mortgage payment. It's a great thing to have but you will need to set up a saving account for it yourself.
That's incorrect. The principal is included as part of the mortgage payment.
That's incorrect. PMI is often a part of your mortgage payment if your down payment was less than 20%.
That's incorrect. Interest is included as part of the mortgage payment.
True or False: Pre-approval and pre-qualification is the same thing.
True
False
That's correct.
That's incorrect. Pre-qualification is only an estimate of the mortgage you may be able to afford but pre-approval is a statement from a lender that you qualify to borrow a certain amount of money.
