04.06 Mortgage Module Exam

 

7. A bank offers the following loans: 
 

Bank A

$235,000 
20-year fixed 
4.375% 
1.75 discount points 
M = $1,470.92 

Bank B

$235,000 
20-year fixed 
4.7% 
0 discount points 
M = $1,512.22 

What is the break-even point for the loans? (4 points)

A. about 5 years

B. about 8 years

C. about 6 years

 

 

8. A bank offers the following loans: 
 

Bank A

$375,000 
15-year fixed 
4.925% 
2.75 discount points 
M = $2,950.85 

Bank B

$375,000 
15-year fixed 
5.2% 
0 discount points 
M = $3,004.69 

What is the break-even point for the loans? (4 points)

A. about 12 years

B. about 17 years

C. about 16 years

 

10. Carl purchased a house that sold for $399,000. He obtained a mortgage of $310,500. The bank charged 1.25 points for an origination fee and 1.5 discount points. What was the total cost of the origination fee and discount points that Carl paid? (3 points)

A. $3,881.25

B. $4,657.50

C. $8,538.75

 

11. Cameron purchased a house that sold for $317,000. He obtained a mortgage of $299,500. The bank charged 2.75 points for an origination fee and 3.0 discount points. What was the total cost of the origination fee and discount points that Cameron paid? (3 points)

A. $17,221.25

B. $8,985.00

C. $18,227.50

 

12. Brady purchased a home for $299,000. He made a 20% down payment and financed the remaining amount. The intangible tax is 0.2%. 
Which of the following is the total amount of the intangible tax? (3 points)

A. $478.40

B. $598.00

C. $47,840.00

 

13. Brandon purchased a home for $419,000. He made a 10% down payment and financed the remaining amount. The intangible tax is 0.2%. 
Which of the following is the total amount of the intangible tax? (3 points)

A. $838.00

B. $83,800.00

C. $754.20

 

14. A mortgage is in the amount of $400,000. The origination fee is 0.9%, the intangible tax is 0.2%, and there are 2.5 discount points. 
Which of the following is the total cost of the origination fee, the intangible tax, and the discount points? (3 points)

A. $10,800

B. $10,000

C. $14,400

 

15. A mortgage is in the amount of $800,000. The origination fee is 0.4%, the intangible tax is 0.2%, and there are 3.5 discount points. 
Which of the following is the total cost of the origination fee, the intangible tax, and the discount points? (3 points)

A. $28,000

B. $32,800

C. $29,600

 

16. Duane is purchasing a home for $351,000. He makes a 30% down payment and obtains a 20-year fixed rate mortgage loan at 5% annual interest. His monthly payments are $1,621.51. He pays an intangible tax of 0.2%. 
Which of the following is the total cost of principal, interest, down payment, and amount of intangible tax? (4 points)

A. $389,162.40

B. $494,953.80

C. $495,164.40

 

17. Downy is purchasing a home for $283,000. He makes a 25% down payment and obtains a 25-year fixed rate mortgage loan at 7% annual interest. His monthly payments are $1,500.14. He pays an intangible tax of 0.2%. 
Which of the following is the total cost of principal, interest, down payment, and amount of intangible tax? (4 points)

A. $450,042.00

B. $521,358.00

C. $521,216.50

 

18. Explain, using complete sentences, the advantages and disadvantages of a balloon mortgage. (6 points)

 

 

 

19. When is it a good idea to purchase discount points on a mortgage? Explain in complete sentences. (6 points)

 

 

 

20. When is it not a good idea to purchase discount points on a mortgage? Explain in complete sentences. (6 points)

 

 

 

21. What is the difference between a documentary stamp tax on a deed and a documentary stamp tax on a mortgage?         Explain in complete sentences. (6 points)

 

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