1. (TCO 5) The market value of a loan is ________ 2. (TCO 5) Which of the following is TRUE regarding the incremental cost of borrowing? 3. (TCO 5) A house is for sale for $250,000. You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000, you can obtain a loan with a 7% rate of interest or (2) if you make a down payment of $50,000, you can obtain a loan with a 5% rate of interest. What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan? 4. (TCO 5) A borrower secured a 30 year, $150,000 loan at 8% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing to pay for the loan? 5. (TCO 5) Loan refinancing decisions must consider ________. 6. (TCO 5) A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. The loan balance is now $151,806.62 and rates for this amount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and closing costs are not financed by the lender. What is the effective cost of refinancing? 7. (TCO 5) A loan was made 10 years ago for $140,000 at 10.5% for a 30 year term. Rates are currently 8%. What is the market value of the loan? 8. (TCO 5) A home equity loan is a loan in which a residential property owner can 9. (TCO 6) A conforming loan 10. (TCO 6) A jumbo loan ________. 11. (TCO 6) Which of the following groups customarily does NOT attend real estate closing? 12. (TCO 6) RESPA requires lenders to disclose to buyers a good faith estimate of certain closing costs within ________. 13. (TCO 6) A typical RESPA closing statement contains which of the following characteristics? 14. (TCO 6) The calculated APR represents the ________. 15. (TCO 6) There are times when a borrower may be able to receive a lower interest rate on a mortgage note in exchange for a ________.
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