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RECA4

RECA exam

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14 views

RECA4

RECA exam

Uploaded by

rahu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Scenario 1: Fixed-Rate vs.

Variable-Rate
Scenario: Jane is deciding between a fixed-rate mortgage and a variable-rate
mortgage for her first home purchase. She is concerned about future interest rate
changes.

Question: What factors should Jane consider when choosing between these two
mortgage types, and what are the potential advantages and disadvantages of each?

Scenario 2: High-Ratio Mortgage


Scenario: Tom and Sarah are first-time homebuyers looking to purchase a home for
$400,000. They have saved $25,000 for a down payment.

Question: Given their down payment, what type of mortgage will they need? Explain
what a high-ratio mortgage is and what implications it may have for them.

Scenario 3: Amortization Period


Scenario: Alex is considering a 15-year amortization period versus a 30-year
amortization period for his mortgage.

Question: What impact will the choice of amortization period have on Alex's monthly
payments and the total interest paid over the life of the loan?

Scenario 4: Reverse Mortgage


Scenario: Margaret, age 70, is looking to tap into her home equity to help fund her
retirement.

Question: What is a reverse mortgage, and how might it benefit Margaret? What are
some potential risks she should consider?

Scenario 5: Construction Mortgage


Scenario: David wants to build his own home and is exploring his financing options.

Question: What is a construction mortgage, and how does it differ from a


traditional mortgage? What steps must David take to secure this type of financing?

These scenarios can help you think critically about mortgage types and their
applications in real-life situations. If you’d like more practice questions or have
specific areas to explore, let me know!

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