FREE RES Finance Questions and Answers
Which of the following best defines an amortized loan?
Correct!
Wrong!
An amortized loan is repaid through regular payments that cover both interest and principal over a set period, gradually reducing the loan balance to zero.
What is the primary function of a mortgage lender in a real estate transaction?
Correct!
Wrong!
A mortgage lender provides the funds needed by the buyer to purchase a property, typically in the form of a loan secured by the property itself.
Which of the following is a common type of mortgage where the interest rate remains the same for the entire term of the loan?
Correct!
Wrong!
A fixed-rate mortgage has an interest rate that remains constant throughout the life of the loan, providing predictable monthly payments.
What is Private Mortgage Insurance (PMI) typically required for?
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Wrong!
PMI is usually required when a borrower makes a down payment of less than 20% of the home's purchase price, protecting the lender in case of default.
In a real estate transaction, what is an "escrow account" used for?
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Wrong!
An escrow account is used by lenders to hold funds for property taxes, homeowners insurance, and other related expenses, ensuring these bills are paid on time.