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

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What is the primary benefit of government-sponsored loans?

Lower down payments
Lower interest rates
Flexible repayment terms
No collateral required

The correct answer is: Lower interest rates

The primary benefit of government-sponsored loans is lower interest rates. These loans are typically backed by government programs aimed at promoting homeownership and making housing more accessible. Because the government provides this backing, lenders can offer lower interest rates than they might for conventional loans, reducing the overall cost of borrowing for applicants. This makes it more affordable for individuals, especially first-time homebuyers or those with lower incomes, to secure financing for a home. While options like lower down payments, flexible repayment terms, and no collateral requirements can also characterize specific government-backed loan programs, the fundamental advantage is the ability to secure a loan with a lower interest rate, which directly affects the financial burden of the mortgage over its life. Institutions often promote these loans as a way to make housing finance more appealing and manageable for borrowers, hence the emphasis on the lower interest rates as the standout benefit.