Finance
A North Dakota borrower whose mortgage payment is 'in arrears' means:
AThe payment is paid before the interest accrues
BThe payment is made after the interest has accrued (paid at the end of the period for the period just completed)✓ Correct
CThe borrower is delinquent
DThe payment includes future interest
Explanation
Mortgage payments are typically paid in arrears, meaning the January payment (due February 1) covers January's interest that has already accrued. This is different from rent, which is usually paid in advance.
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Key Terms to Know
Proration
The division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
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.
Math Concepts
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