Mortgage Basics Quiz

1. What is the primary purpose of a mortgage?

To rent a property To finance the purchase of real estate To pay property taxes To obtain home insurance

2. What is a conventional mortgage?

A mortgage insured by the FHA A mortgage not insured or guaranteed by the federal government A mortgage for veterans only A mortgage with adjustable rates

3. What does LTV stand for in mortgage lending?

Loan to Value Late Term Variable Lien Title Verification Lender Terms and Conditions

4. What is the typical minimum down payment required for a conventional mortgage?

0% 3% 20% 50%

5. What happens when your LTV exceeds 80% on a conventional loan?

You must pay PMI Your interest rate decreases You automatically qualify for refinancing The loan is paid off

6. Which loan type is guaranteed by the Veterans Administration?

FHA loan USDA loan VA loan Conventional loan

7. What is an escrow account used for?

Holding the borrower's down payment Paying property taxes and insurance on behalf of the borrower Storing closing documents Holding insurance claims

8. What is the difference between pre-qualification and pre-approval?

They mean the same thing Pre-qualification is an estimate; pre-approval is a verified commitment Pre-approval is only for first-time buyers Pre-qualification requires a credit check

9. What is a jumbo mortgage?

A small loan for first-time buyers A loan exceeding conforming loan limits A government-backed loan A loan with balloon payment

10. What is the primary benefit of a 15-year mortgage over a 30-year mortgage?

Lower monthly payments Less total interest paid over the life of the loan No down payment required Flexible payment options

Quiz Results