Mortgage Agent Licensing Practice Exam · Question
When does the mortgage 'term' typically differ from the mortgage 'amortization period'?
The mortgage term is the duration of the current contract with a lender, typically 1 to 5 years, after which the mortgage must be renewed or refinanced. The amo
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Question: When does the mortgage 'term' typically differ from the mortgage 'amortization period'?
Answer options:
- They are always the same.
- The term is the total time to pay off the mortgage, while amortization is the length of the agreement with the lender. ✅ The term is the length of the agreement with the lender (e.g., 1-5 years), while amortization is the total time to pay off the mortgage (e.g., 25 years).
- Amortization applies only to insured mortgages, while the term applies to all mortgages.
Correct answer: The term is the length of the agreement with the lender (e.g., 1-5 years), while amortization is the total time to pay off the mortgage (e.g., 25 years).
Explanation: The mortgage term is the duration of the current contract with a lender, typically 1 to 5 years, after which the mortgage must be renewed or refinanced. The amortization period is the total length of time it would take to pay off the entire mortgage balance, usually 15-30 years.
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Question explanations
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