Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 1

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What is a key advantage of government-sponsored loans?

Higher interest rates
Lower down payments
Lower interest rates
No documentation requirements

The correct answer is: Lower interest rates

A key advantage of government-sponsored loans is that they typically offer lower interest rates compared to conventional loans. These loans are often backed by government entities, which reduces the risk for lenders. As a result, lenders can provide financing at more favorable rates. Lower interest rates can significantly reduce the overall cost of borrowing, making home ownership more accessible and manageable for borrowers. While some loans may have lower down payment requirements, the primary characteristic of government-sponsored loans that distinguishes them is the lower interest rate that helps homeowners save money over time. This advantage can lead to substantial savings on monthly mortgage payments, further reinforcing the appeal of these loans for prospective buyers.