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1.
Because fixed-rate mortgage payments are amortized, the percentage of each payment that is applied to interest _______.
Decreases with time. With an amortization schedule, the portion of each monthly payment applied to interest decreases as your equity grows.
2.
The current market value of your home, minus what you owe on it, is commonly known as your _________.
Home equity. Your home equity is the difference between what you own (the current market value of your property) and what you owe on the property.
3.
Your cost basis equals the sales price of your house minus what you paid for it.
False. Your cost basis is what you paid to buy AND upgrade your home.
4.
Title insurance on a house protects the mortgage lender if you become insolvent.
False. Title insurance guarantees that the seller is the bona fide owner and has all rights to transfer ownership.
5.
All of the following items may receive favorable tax treatment, except _______.
Mortgage principal payments. While you may be able to deduct property taxes and the part of your mortgage payment that goes to interest on the loan, the principal portion of the monthly payment is not deductible.