The Federal Reserve's monetary policy decisions affect NC mortgage interest rates primarily because:
Why Changes in the federal funds rate influence the cost of funds for lenders, which affects mortgage rates Is Correct
Answer B: Changes in the federal funds rate influence the cost of funds for lenders, which affects mortgage rates
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 North Carolina Questions
- Which federal act requires lenders to provide borrowers with a Good Faith Estimate and Truth-in-Lending disclosure for mortgage loans (pre-TRID, still relevant for HELOC and reverse mortgages)?Finance
- Which federal law requires lenders to disclose the Annual Percentage Rate (APR) to borrowers?Finance
- The secondary mortgage market institution 'Fannie Mae' (Federal National Mortgage Association) primarily:Finance
- In the income approach, the 'overall capitalization rate' (OAR) differs from a 'mortgage capitalization rate' in that the OAR:Property Valuation
- Which federal act requires mortgage lenders to disclose whether they share nonpublic personal information about borrowers with third parties?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.
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.
RedliningAn illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
Math Concepts
Study This Topic
Practice More North Carolina Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free North Carolina Quiz →