Loan Capital: Mortgage - SS2 Accounting Past Questions and Answers - page 1
What is a mortgage?
A loan used to buy a property
A loan used to pay for education
A loan used to start a business
None of the above
What is the role of a mortgage in loan capital?
To provide a way for people to finance the purchase of a property
To provide a way for people to pay for education
To provide a way for people to start a business
None of the above
How is the interest rate on a mortgage determined?
By the creditworthiness of the borrower
By the length of the loan term
By the current market interest rates
All of the above
What happens if a borrower is unable to make their mortgage payments?
The lender can take possession of the property
The lender forgives the debt
The borrower must pay a penalty fee
None of the above
Who typically issues mortgages?
Banks
Credit unions
Other financial institutions
All of the above
What is equity in a home, and how is it built?
Equity in a home is the difference between the value of the property and the amount still owed on the mortgage. It is built over time as the borrower makes mortgage payments and the value of the property increases.
What is foreclosure, and how does it relate to a mortgage?
Foreclosure is the legal process by which a lender can take possession of a property when the borrower is unable to make mortgage payments. Foreclosure is related to a mortgage because the property serves as collateral for the loan, and the lender has the right to take possession of the property if the borrower defaults on the loan.