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Mortgage Quiz: First Time Homebuyers - Quiz 1

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1. An adjustable-rate mortgage (ARM):

  1.  Immediately adjusts to market conditions after closing
  2.  Has a fixed rate for the life of the loan
  3.  Is a fixed rate for a specified period before adjusting to market conditions
  4.  Always has a lower rate than a fixed-rate mortgage

2. A "point" is:

  1.  1% (1.000%) of the loan amount
  2.  1/8 (.125%) of the loan amount
  3.  A price quote
  4.  Advice given from a loan officer

3. A conforming mortgage loan is:

  1.  A second mortgage
  2. The maximum loan size that will be purchased by Fannie Mae or Freddie Mac
  3. $1 million or more 
  4. A mortgage for a 2-unit home

4. A first-time homebuyer:

  1. Must have a down payment of at least 20%
  2. Has not had a financial interest in a primary residence in the past 3 years
  3. Must purchase a home solely, not jointly
  4. Must have a credit score of at least 720

5. An escrow account:

  1. Reduces the principal balance on a mortgage loan
  2. Records the interest paid as part of a monthly mortgage payment
  3. Is an account in which the monthly mortgage payment is deducted
  4. Ensures property taxes and insurance premiums are paid on time

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