### What is a note rate? - [x] The interest rate that you pay on your mortgage loan, as stated on the promissory note - [ ] The interest rate after adjustments in an adjustable-rate mortgage - [ ] The principal amount of the mortgage loan - [ ] The annual outstanding mortgage balance > **Explanation:** A note rate is the interest rate you agree to pay on your mortgage loan, as stated in the promissory note. It is the fixed percentage charged annually on the uncured principal amount. ### Where can you find the note rate of your mortgage? - [x] On the promissory note - [ ] On the down payment agreement - [ ] On the deed to your house - [ ] On your home insurance policy > **Explanation:** The note rate is specifically mentioned on the promissory note you sign when you agree to the loan terms. This document outlines the interest rate you will pay on the borrowed amount. ### If you have a fixed-rate mortgage, what would happen to your note rate over the term of the loan? - [x] It remains the same - [ ] It adjusts annually - [ ] It increases by 1% each year - [ ] It decreases by 0.5% each year > **Explanation:** For fixed-rate mortgages, the note rate remains constant throughout the life of the loan, ensuring stable monthly payments based on a consistent interest rate over the term. ### What initial interest rate would you pay on an adjustable-rate mortgage before the rate adjusts? - [x] The note rate - [ ] The preliminary rate - [ ] The fixed rate - [ ] The APR rate > **Explanation:** For an adjustable-rate mortgage, the initial interest rate you pay is the note rate. This rate will adjust later based on the specified terms in the mortgage agreement. ### In a 30-year fixed mortgage loan, what does the note rate of 4% signify? - [ ] The loan will have variable interest rates after 10 years - [ ] You only pay 4% interest in the first year - [x] You pay a 4% interest rate annually for 30 years - [ ] The note rate changes every 5 years > **Explanation:** In a 30-year fixed mortgage, a 4% note rate means you pay an annual interest rate of 4% on the principal loan amount for the entire term of 30 years, ensuring predictable payments. ### On what document is your signature an agreement to the note rate? - [ ] Deed of Trust - [ ] Mortgage Insurance Policy - [x] Promissory Note - [ ] Home Purchase Agreement > **Explanation:** Your signature on the promissory note indicates your agreement to pay the specified note rate on your mortgage loan. This document legally binds you to the terms, including the interest rate. ### What effect does a note rate have on monthly mortgage payments in a fixed-rate loan? - [x] Determines the fixed amount of interest to be paid - [ ] Changes the amount of principal to be repaid - [ ] Alters the length of the loan term - [ ] Influences the property insurance amount > **Explanation:** In a fixed-rate loan, the note rate sets the fixed interest component of monthly mortgage payments. This ensures the amount of interest to be paid does not vary over the loan term. ### Can the note rate in an adjustable-rate mortgage change over time? - [x] Yes, after an initial period - [ ] No, it remains the same throughout - [ ] Yes, it changes monthly regardless of the initial period - [ ] No, it changes only during a refinancing > **Explanation:** In an adjustable-rate mortgage, the note rate applies for an initial period but later adjusts periodically based on market conditions and the terms specified in the agreement. ### What determines the stability of the note rate in a mortgage? - [x] Whether the loan is fixed-rate or adjustable-rate - [ ] The amount of the down payment - [ ] The borrower's credit score improvement - [ ] The property's assessed value > **Explanation:** The stability of the note rate is determined by whether the mortgage is a fixed-rate loan (constant throughout) or an adjustable-rate loan (initially fixed then subject to adjustment). ### Why would someone prefer a loan with a fixed note rate over an adjustable one? - [x] For predictable and stable monthly payments - [ ] For potentially lower starting interest rates - [ ] For better refinancing options - [ ] For short-term financial flexibility > **Explanation:** Borrowers may prefer a fixed note rate to ensure predictability and stability in their monthly mortgage payments, avoiding future uncertainties associated with interest rate fluctuations.