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Question 1 of 8
1. Question
A borrower chooses an interest-only mortgage because the initial payment is significantly lower than a comparable fully amortizing loan. What is the primary advantage the borrower is seeking?
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Question 2 of 8
2. Question
A borrower qualifies for a larger home than would normally be possible with a conventional mortgage because of the lower introductory payments on an interest-only loan. Which advantage is being demonstrated?
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Question 3 of 8
3. Question
A young professional expects substantial salary increases over the next five years and selects an interest-only mortgage. What assumption is the borrower making?
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Question 4 of 8
4. Question
A borrower intends to sell the property before the interest-only period expires. Why might this strategy be attractive?
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Question 5 of 8
5. Question
A borrower plans to refinance an interest-only mortgage before the payment increases. Which event could make this strategy unsuccessful?
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Question 6 of 8
6. Question
A borrower receives a large annual bonus and applies it directly toward the principal balance of an interest-only mortgage. What benefit may result?
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Question 7 of 8
7. Question
A borrower regularly applies raises and bonuses toward principal reduction instead of increasing monthly spending. Which advantage of an interest-only mortgage is being utilized?
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Question 8 of 8
8. Question
A borrower loses a job temporarily and experiences a reduction in household income. Which feature of an interest-only mortgage may help during this period?
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