Test for mortgage knowledge

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7 mortgage questions YOU can answer!

April is Financial Literacy Month. Aside from taxes, probably no financial instrument or process is less understood than mortgages and the mortgage market. The truth is, it is a complex market, but by no means beyond the comprehension of most people...even you! In addition to being intimidating, it can also be hard to find an objective, unbiased source of information to help you.

HSH.com is one of those sources, so rummage around our library of articles, use our various tools and calculators to improve your mortgage IQ before you shop for your mortgage. To get you started, here's a little quiz to test your mortgage knowledge...

True false

QUESTION 1:

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1) You must have at least 20 percent of the purchase price as a down payment in order to buy a home.

True False

QUESTION 2:

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PMI 2) Private mortgage insurance (PMI) is a policy that will pay your monthly mortgage payments if you can't make them.

True False

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Money down drain 3) Getting a mortgage means paying several thousand dollars in points and closing costs in addition to the down payment.

True False

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Money wrench 4) A "hybrid ARM" is a product that allows you to convert your adjustable rate mortgage (ARM) into a fixed rate mortgage at a specified point in time.

True False

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Sold Sign 5) You can get a mortgage commitment from a lender even before you find a house you want to buy.

True False

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refi application 6) Refinancing your mortgage will always save you money.

True False

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7) A two-parter: A 15-year mortgage term has double the monthly payment as a 30-year term does, and the 30-year will cost twice as much in interest costs.

True False

How'd you do?

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Final Score: Not completed

How'd you do? Most people get tripped up on a couple, and that's OK. As part of your mortgage education and as you strive for financial literacy, figuring out what you DON'T know is just as important as figuring out what you DO know.

Here's a tip to help you to get a great deal on a mortgage you can fully understand: eliminate what you don't need to know by deciding what you need or want beforehand. There's a huge difference between walking into a lender's office and saying "I need a loan" and "I need a 30-year conforming fixed rate loan of $200,000. I have a FICO score of 762 and have 20 percent to put down."

The first statement will see you presented with a litany of choices and options which will likely overload you with too much information. The second will be focused on your deal, and you will get only the information you need. Best of luck!

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