A graduated payment mortgage (GPM) has payments that:
Why Start lower and increase over a specified period before leveling off Is Correct
Answer B: Start lower and increase over a specified period before leveling off
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related Alabama Questions
- A buyer obtains a $180,000 mortgage at 7% for 30 years. The monthly payment factor is $6.65 per $1,000 borrowed. What is the monthly principal and interest payment?Real Estate Math
- A loan that requires only interest payments during the loan term with the principal due in full at the end is called a(n):Finance
- A mortgage loan that is interest-only for the first 10 years and then fully amortizes over the remaining 20 years is called a(n):Finance
- In Alabama, what instrument is primarily used to secure a mortgage loan with real property as collateral?Finance
- What is the primary purpose of discount points on an Alabama mortgage loan?Finance
Key Terms to Know
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →