Finance
A fixed-rate mortgage in North Dakota has which key characteristic?
AThe interest rate changes annually based on an index
BThe interest rate and monthly payment remain constant for the life of the loan✓ Correct
CThe payment is interest-only for the first 10 years
DThe rate adjusts every 5 years based on treasury yields
Explanation
A fixed-rate mortgage maintains the same interest rate and principal-and-interest payment for the entire loan term. This provides payment stability and predictability for borrowers.
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Key Terms to Know
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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