In Alaska, 'negative amortization' on a mortgage occurs when:
Why The scheduled payment is insufficient to cover the accrued interest, and the unpaid interest is added to the principal balance Is Correct
Answer B: The scheduled payment is insufficient to cover the accrued interest, and the unpaid interest is added to the principal balance
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.
Key Finance Terms in This Question
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
- 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
- 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
- An Alaska homeowner refinances a $240,000 mortgage to a new loan at a lower rate. The refinance saves $185/month in payments. Closing costs are $5,000. The break-even period is approximately: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
- 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
- Which type of Alaska mortgage loan is specifically designed for rural areas and typically requires no down payment?Finance
Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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 →