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are144-s08-midtermvb_key2 - Eric Johnson ARE 144 Spring...

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Eric Johnson Name:__________________ ARE 144 Student ID:______________ Spring 2008 Ellen Banh Josh Hanosh ARE 144 Midterm Multiple Choice : Please read each question carefully and choose the BEST answer. (2 points each) 1. One of the first amortizing mortgages was the constant amortization mortgage. Which of the following characterized the components of the CAM payment over the life of the loan? A. A Above. B. B Above. C. C Above. D. D Above. 2. Risk is an important component of interest rates. Which of the following risks is not a determinant of interest rates? 3. What type of estate lasts for an indefinite period of time? 4. Ted Bundy took out a 30-year 6.66% 99,000 loan to finance his new house. Which of the following monthly payments would partially amortize his loan?
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5. Bob just purchased a new house. When purchasing the house, he found that PG&E had the legal right to access his property to repair their wires. What is this legal right called? A. Restrictive Covenant B. Easement C. Lien D. Adverse Possession E. Eminent Domain Use the following information to answer the next 2 problems: Joe is considering buying a 2500 sqft house in Natomas for $366,000. He decides to visit his local bank to see what kind of loan he can get for his potential home. Right away the loan officer tells him about a promotional ARM that will let him pay interest only payments at a rate of prime minus 2% for the first 3 years. Prime = 5% Margin = 2% After the first year, use the composite interest rate. Assume for each problem that he made interest only payments for the first year.
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