A borrower in Alaska who makes a voluntary additional principal payment on their mortgage will:
Why Reduce the outstanding principal balance and pay less total interest over the life of the loan Is Correct
Answer B: Reduce the outstanding principal balance and pay less total interest over the life of the loan
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 Alaska Questions
- A mortgage that requires equal monthly payments applied first to interest, with the remainder reducing the principal balance, is called a(n):Finance
- An Alaska property is sold at foreclosure for less than the outstanding loan balance. The difference the borrower may owe the lender is called:Finance
- A borrower in Alaska obtains a $300,000 mortgage at 6% interest with a 30-year amortization. The approximate monthly payment for principal and interest is:Finance
- Which type of mortgage loan is characterized by a fixed interest rate and equal monthly payments that fully repay the loan over its term?Finance
- An Alaska property has a loan balance of $180,000. Monthly principal and interest payment is $1,250. Of that, $900 is interest. How much is applied to principal reduction?Real Estate Math
- A borrower in Alaska has a debt-to-income (DTI) ratio limit of 43%. Their gross monthly income is $6,500. What is the maximum total monthly debt payment allowed?Real Estate Math
- A borrower in Alaska has a $175,000 mortgage. After 1 year of making monthly payments, the principal balance has decreased by $3,600. The LTV ratio on a property now worth $225,000 is:Real Estate Math
- An Alaska buyer obtains a $380,000 mortgage. Monthly P&I payment is $2,394. Of the first payment, $1,806 is interest. How much principal is reduced?Real Estate Math
Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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 Alaska Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →