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Which of the following is not included in the loan terms of the HUD Settlement Statement.

Select one:
a. The loan term
b. How many monthly payments will be made
c. Whether the interest rate can rise
d. The presence of a balloon payment

User Sabyasachi
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1 Answer

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Final answer:

The HUD Settlement Statement includes the loan term, number of monthly payments, and presence of a balloon payment, but does not include whether the interest rate can rise. For an adjustable-rate mortgage, a 3% fall in inflation would likely result in lower interest payments for the homeowner.

Step-by-step explanation:

The HUD Settlement Statement, also known as HUD-1, details the terms of a loan when purchasing or refinancing property. It would typically include the loan term, the number of monthly payments that will be made, and the presence of a balloon payment. However, it would not detail whether the interest rate can rise, as that is a feature of the loan product itself and not part of the settlement statement. The HUD-1 focuses more on the actual costs and payments to be made at closing.

When discussing adjustable-rate mortgages (ARMs), it is important to understand that the interest rate for ARMs changes with market interest rates. Therefore, if inflation were to fall unexpectedly by 3%, it would likely lead to a decrease in market interest rates, which would in turn lower the interest payments for a homeowner with an adjustable-rate mortgage. This is in contrast to a fixed-rate mortgage, where the interest rate remains constant regardless of market conditions.

User Swinkaran
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