FI 436 Test 1
If you deposit $1,000 in an account that earns 5% per year, compounded annually, you will have $1,276 at the end of 5 years. What would be the balance in the account at the end of 5 years if interest compounds monthly?
$1,283
At the end of 8 years, your friend wants to have $50,000 saved for a down payment on a house. He expects to earn 8% - compounded monthly - on his investments over the next 8 years. How much would your friend have to put in his investment account each month to reach his goal?
$374
A borrower obtains a $150,000 reverser mortgage with monthly payments every 10 years. If the interest rate of the mortgage loan is 8%, what is the monthly payment received by the borrower?
$820
A borrower takes out a 30-year mortgage loan for $100,392 with an interest rate of 13% and monthly payments. What portion (dollar amount) of the first month's payment would be applied to interest?
1,087.6 +/- 10
A borrower takes out a 15-year mortgage loan for $100,000 with an interest rate of 5% plus 3 points. What is the effective annual interest rate of the loan if the loan is carried for 7 years?
5.4%
A borrow takes out a 15-year mortgage loan for $100,000, with an interest rate of 5% plus 3 points. What is the effective annual interest rate on the loan if the loan is carried for all 15 years?
5.5%
A borrow takes out a 30-year loan for $171,353 with an interest rate of 5% and monthly payments. What portion (dollar amount) of the first month's payment would be applied to interest?
714.0 +/- 10
Your friend just won the lottery. He has a choice of receiving $125,742 a year for the next 15 years or a lump sum today. The lottery uses a 10% discount rate. What would be the lump sum your friend would recieve?
956,403.65 +/- 3
A(n) ____________ estate represents the most complete form of ownership of real estate; the owner is free to divide it up into lesser estates and sell, lease, or borrow against them as he/she wishes.
Fee simple
What term BEST describes a person that owns a property and is conveying title to the property to another person?
Grantor
Points are also known as:
Loan discount fees
A mortgage is BEST defined as a legal document that:
Names real estate as the security or collateral for the repayment of a loan
Assuming all APRs equal, the effective interest rate on a loan is highest when:
Points are charged and the loan has a 30 year maturity but prepaid in five years
It is a federal law that a mortgage must be recorded to be valid.
False
A borrower has a 4-year car loan for $24,022 with an interest rate of 6% and monthly payments. If she wants to pay off the loan after 2 years, what would be the outstanding balance on the loan?
12,729 +/- 100
You deposit $93,997 in an account that earns 3% per year, compounded annually. What would be the balance in the account at the end of 26 year?`
202,713.11
Someone had a 21 year mortgage loan for $247.272 with an interest rate of 11% and monthly payments. If she wants to pay off the loan after 8 years, what would be the outstanding loan balance?
208,640 +/- 100
A borrower takes out a 16-year mortgage loan for $404,207 with an interest rate of 9%. What would the monthly payment be?
3,979.88
A mortgage is the same thing as a note.
False
The Acceleration Clause says notice of all, but which of the following must be given to the mortgager?
Acceleration of debt secured by the mortgage has taken place because of default
Inflation makes very little difference to lenders of and investors needing money
False
A reversion and a remainder are similar in that:
Both can be sold or mortgaged
A clause that specifies that the mortgager will pay all property taxes and other charges assessed against the property, even if these charges have priority over the mortgage, is typically included in the mortgage.
True
A clause which specifies that the mortgagee will obtain and maintain property insurance is typically included in a mortgage.
True
A fee simple estate is a type of freehold estate.
True
As compared to the other types of deeds, a general warranty deed provides the most comprehensive warranty about the quality of the title to the property.
True
Lenders and investors worry about default, interest rate, marketability, and liquidity risks.
True
Real estate refers to the physical land and improvements constructed on the land.
True
Unless stated otherwise, the borrower is personally liable for payment of all amounts due under the terms of the note.
True
