Mortgage Quiz

1) What is the difference between a Canadian Mortgage and an American Mortgage?
a) No difference. Simply two different ways in referring to the same thing.
b) Canadian Mortgages charge the interest in advance.
c) A Canadian Mortgage has Semi-Annual Compounding where an American is Monthly Compounding.
d) Canadian Mortgages are in Canadian currency.

2) What is the difference between a 360 Day Year and a 365 Day Year Monthly Amortization Schedule?
a) The 365 Day Schedule uses the exact days in the month to calculate interest.
b) The 360 Day method is more accurate.
c) 5 Days.
d) No Difference.

3) Mathematically, what is the difference between a Car Loan and a Mortgage in the United States?
a) Car Loans use 360 Day Year Monthly Schedules.
b) Car Loans are for 3 years only.
c) There is no difference.
d) Car Loans allow you to make late payments.

4) If I pay the Interest Rate Differential (IRD) to the lender, will I save money?
a) Yes, but only in the last year.
b) Yes, although the savings are prorated.
c) No, you are only changing 4 quarters for a dollar.
d) No, except for the very last payment.

5) Do I save interest by paying my Mortgage weekly instead of Monthly?
a) No, the interest payed is similar.
b) No, because the compounding frequencies are different.
c) Excercising your anniversary pre-payment privledges achieves the same results.
d) Yes, because you are reducing the outstanding balance faster.

6) Will paying Monthly and Prepaying the Anniversary Pre-Payment every year be the same as paying weekly payments?
a) Yes, if you have an open mortgage.
b) Depends upon the bank.
c) No, because interest damages have already been done prior to the pre-payment.
d) Yes, because the anniversary pre-payment is usually large.

7) What does Effective Interest Rate (EIR) mean?
a) It is what Americans call APR.
b) It is the real rate you pay because of the "compounding".
c) The Interest Rate that goes into effect if you miss a payment.
d) The actual Interest Rate you pay because of finder's fees.

8) Do the mathematical rules and equations for Mortgages also apply to Loans?
a) No, because Loans are special types of Mortgages.
b) Yes, because a Mortgage is just a name for a special type of loan.
c) No, because the compounding is different.
d) Yes, because a different Effective Interest Rate is used.

9) What is the difference between the Advance Date and the Interest Adjustment Date?
a) You are advanced the loan on the Advance Date, you pay interest on the Interest Adjustment Date
b) The Interest Adjustment Date is always before the Advance Date.
c) The Interest Adjustment Date can never be the same.
d) There is no difference.

10) What does the Annual Percentage Rate (APR) mean?
a) The same as the Effective Interest Rate.
b) The yearly rate minus the total of all fees and points.
c) The same as the Annual Interest Rate but in a percentage.

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