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1.
Points are a pre-payment of principal.
False. Points are a pre-payment of interest.
2.
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.
3.
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.
4.
All of the following are examples of capital improvements to a home except _______.
Repairing the driveway. The other projects increase or improve the livable area in your home and could increase its appraised value. Repairing the driveway is necessary, but only maintains what was already there.
5.
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.