CMA Mortgage Products & Loan Types 1

Question 1

What is a fixed-rate mortgage?

Accepted Answer

The interest rate is fixed and remains the same

Answer

The interest rate changes periodically.

Answer

The loan payments are variable.

Answer

The loan is for a short term only.

Question 2

What is an adjustable-rate mortgage (ARM)?

Accepted Answer

The interest rate adjusts periodically

Answer

The interest rate remains fixed.

Answer

The loan is interest-only for the entire term.

Answer

The loan has no monthly payments.

Question 3

What is a conventional mortgage?

Accepted Answer

It is a loan offered by private lenders

Answer

It is a loan backed by the government.

Answer

It has no down payment.

Answer

It is the same as an FHA loan.

Question 4

What is an FHA loan?

Accepted Answer

A government-insured loan with low down payment requirements

Answer

A loan for first-time homebuyers.

Answer

A loan with no credit requirements.

Answer

A loan that does not require mortgage insurance.

Question 5

What is a VA loan?

Accepted Answer

A loan for military personnel with no down payment

Answer

A government-backed loan with a 20% down payment.

Answer

A conventional loan with low-interest rates.

Answer

A loan with interest rates set by the lender.

Question 6

What is a jumbo loan?

Accepted Answer

A loan exceeding the conforming loan limit

Answer

A loan that is not subject to any limits.

Answer

A loan for first-time homebuyers only.

Answer

A loan guaranteed by the federal government.

Question 7

What is the purpose of mortgage insurance?

Accepted Answer

To protect the lender in case of default

Answer

To protect the borrower from losing their home.

Answer

To cover the closing costs.

Answer

To reduce the mortgage interest rate.

Question 8

What is the benefit of a bi-weekly mortgage payment plan?

Accepted Answer

It reduces the total interest paid over the life of the loan

Answer

It increases the monthly payment amount.

Answer

It allows for variable interest rates.

Answer

It makes monthly payments more affordable.

Question 9

What is the difference between a home equity loan and a home equity line of credit (HELOC)?

Accepted Answer

A home equity loan is a lump sum, while a HELOC is a revolving credit line

Answer

A home equity loan is for home improvements only.

Answer

A HELOC has fixed payments, while a home equity loan has variable payments.

Answer

A HELOC is for first-time homebuyers.