Question

12)   If the payments of a loan are the same amount every month and pay all of the principle and interest due every month according to the amortization schedule. The loan is a ________________ mortgage.

Non-amortizing

Negative-amortizing

Partially-amortizing

Fully-amortizing

14)   True of False. The contractual interest rate and yield to maturity of a mortgage loan are same when there are NO fees, points and prepayment penalties associated with the loan.

True

False

16)   All of the following are types of prepayment penalties EXCEPT.

Defeasance

Yield maintenance

Default differential

All of the above are types of prepayment penalties

17) All of the following are factors which one should include in the decision to refinance EXCEPT.

      

The consideration of the tax gains from interest saved.

The opportunity cost of investing the new loan fees elsewhere and not refinancing.

Bringing future savings into present value.

All of the above should be included in the decision to refinance.

Answer 1

12) If the payments of a loan are the same amount every month and pay all of the principle and interest due every month according to the amortization schedule. The loan is a Fully-amortizing mortgage.

it cannot be a non-amortizing mortgage since for a non-amortizing mortgage there is no amortization schedule for repayment of the loan

for a negative amortizing mortgage, the outstanding balance for the loan increases since the loan payment for a period can be less than the interest on the loan

for a partially amortizing loan, the loan is divided into two parts , one of which containes partially amortized payments for the loan and the other is a balloon payment at the loan maturity date

14)