7. Mortgages increase the risk faced by homeowners. (LO2) a. Explain how. b. What happens to the homeowner's risk as the down payment on the house rises from 10 percent to 50 percent?
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- Give typing answer with explanation and conclusion2. Which of the following risks are insurable? For risks which are not insurable, explain why they are not insurable.(i) The risk that a $10 Christmas decoration will be broken.(ii) The risk that a borrower will need to pay interest on a debt.(iii) The risk that the interest rate on a debt will increase.(iv) The risk that an insurance company will have to pay too many losses.(v) The risk that an individual is late for an important meeting.(vi) The risk that a pregnancy will result in multiple births (twins, triplets,etc.) incurring unplanned expenses.(vii) The risk of an individual being killed by a malfunctioning self-flyingaeroplane within the next 30 years.(viii) The risk that a dress will not be fashionable in two month’s time.Which of the following is NOT typically a benefit of taking a 15 year mortgage instead of a 30 year mortgage? Less total payments. Lower monthly payment Less total money paid back on the loan. Lower interest rate.
- a wraparound loan. В. a conventional loan. C. an open-end loan. D. a growing-equity loan. 19. When a lender offers a below-market interest rate in exchange for an equity position in the property, this is called Aa shared appreciation loan. a growing-equity loan. C. an open-end loan. D. an installment loan. B. 20. The asking price of a home is less than the amount that the homeowners owe. What is a possible solu- tion for them to sell their home? A. Petition the lender to agree to a short sale B. Quickly refinance the home C. Take out a home equity loan to first loan рay off the D. Borrow from the buyers and give the buyers a 10-year promissory noteent PA) ice onsHow might a sudden decrease in people's expectations of future real estate prices affect interest rates? O A. Interest rates would increase because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase. B. Interest rates would increase because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. OC. Interest rates would decrease because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. O D. Interest rates would decrease because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase.How is a home mortgage an example of Time Value of Money? What would you expect the impact of varying terms (years needed to pay off the loan) and rates to be using TVM rules? Why do homeowners sometimes refinance their mortgages?
- true or false: Households who borrow later in a housing market cycle will, holding other variables constant, tend to have reduced risk of default46-50 When you are planning to buy a house or property mostly you will take mortgage loans. But you may think first of the finance charge or interest that will cost you to own it and you will commit to making monthly payments. Do you think that mortgage loans will be helpful or it can be a burden because of your commitment to pay the monthly payments? Why?What is the current rate of interest for a 30-year mortgage? Is this a reasonable rate of return for the financial institutions? Are you willing and able to borrow at this rate (no need to disclose personal financial information, just is this attractive to you and why)? Are banks willing and able to make loans? Why or why not? Add the refreances or coteation work please
- Borrowers should consider refinancing their existing fixed rate mortgage (FRM) loan only when the market interest rates _____; and they should refinance _____ frequently as the refinance closing costs rise. Group of answer choices increase; less increase; more decrease; less decrease; moreF2Question 1 Assume you are an investor and you expect interest rate to rise in the near future, how would this affect your investment decision in the short and in the long term. Question 2 Assume yous are a potential borrower and you anticipate that interest rate will decline in the near future. How will it affect your borrowing decision in the short term as well as in the long term.