Mortgage and Loans
What is the name for the total amount of money borrowed that must be repaid when you take out a mortgage?
The mortgage principal.
What is the term for the percentage charged to borrow money?
The interest rate
What is the term for making periodic payments to a landlord for use of property?
Renting or leasing.
What is a common reason people apply for a mortgage?
To purchase a home.
What should you call the amount borrowed that must be repaid to purchase a home?
The principal
Leah saved some money for a down payment and borrowed the rest to buy a car. What two main parts make up the total amount she must pay back over the life of the loan?
The principal and the interest.
What two items on a credit report help lenders decide whether to approve a loan?
Credit score and credit history
What is a leasing contract?
A legal document that allows the renter to use the property for a period of time.
Which type of home loan is considered to be the best option for buying a home?
15 year conventional loan
If someone signs a lease and later disagrees with terms, why can't they simply change the lease on their own?
Because a lease is a legally binding contract once signed; changes require agreement from both parties.
Nadia saved $25,000 and borrowed $190,000 for a mortgage loan loan. In mortgage or loan terms, what does the $20,000 represent?
Down payment
hich person would most benefit from a fixed interest-rate loan: someone planning to live in a 30-year mortgage house long-term, or someone planning to flip a house in 18 months?
The person planning to live in the house with a 30-year mortgage benefits most from a fixed rate because payments stay stable over time.
Why must you read a leasing contract carefully before signing?
Because once signed, it is legally binding and enforceable.
Before buying a house, why is it important to have an emergency fund and enough cash for a down payment?
To cover unexpected expenses and meet lender/down payment requirements to secure financing.
What does it mean to "evaluate and interpret terms and conditions within a contract"? Give one example related to housing.
It means to read and understand obligations, deadlines, fees, and penalties—for example, understanding late-fee rules for rent.
Explain briefly why making a larger down payment can reduce the overall cost of a mortgage.
A larger down payment reduces the principal amount borrowed, which lowers interest charged over time and may reduce monthly payments.
Define "annual percentage rate" and explain how it differs from just the interest rate.
The annual percentage rate (APR) reflects the yearly cost of borrowing including fees and interest, while the nominal interest rate is just the stated rate without extra costs.
Name at least four pieces of information that should be included in a lease.
Property address, rental term (dates), security deposit terms, pet fees (and often landlord/tenant names, payment terms, and rules).
Compare a 15-year fixed-rate mortgage and a 30-year fixed-rate mortgage in terms of monthly payment and total interest paid.
A 15-year mortgage typically has higher monthly payments but results in less total interest paid; a 30-year mortgage has lower monthly payments but more total interest over time.
A lease includes a "security deposit" clause. Explain the purpose of a security deposit and one condition that might allow the landlord to keep some or all of it.
A security deposit protects the landlord against damage or unpaid rent; the landlord may keep funds to repair damage beyond normal wear-and-tear or to cover unpaid rent.
A borrower takes a 5-year loan at 5% interest. Identify two major factors from the borrower's perspective that influence how much the loan will cost overall.
The interest rate and the length (term) of the loan; also the size of the principal and the down payment.
How does a higher credit score typically affect the interest rate offered to a borrower? Explain the impact on borrowing costs.
A higher credit score usually results in lower interest rates, reducing total interest paid and lowering monthly payments.
Explain one advantage and one disadvantage of renting instead of buying.
Flexibility and less upfront cost; Disadvantage: No equity building and less stability/control over property.
Describe what "equity" means in a home and how it changes when a homeowner makes mortgage payments.
Equity is the portion of the home's value owned outright; it increases as the principal is paid down or if the property's market value rises.
Explain how a contract for buying a home might include contingencies (like inspection or financing), and why such contingencies protect the buyer.
Contingencies allow the buyer to cancel or renegotiate if certain conditions aren't met (e.g., failed inspection, loan denial), protecting buyers from being forced to complete an unfavorable purchase.