Question 1

Interest is equal to principal times rate divided by time.

Accepted Answer

A) True 
 B)False  False

Question 2

Darlene Ramirez bought a home for $140,000. She put 20% down with a mortgage rate at 7.5% for 25 years. Her yearly payments are:

Accepted Answer

A) $1,776 
B) $9,932.16 
C) $12,415.20 
D) $9,329.61 
E) None of these 
A) $1,776 
B) $9,932.16 
C) $12,415.20 
D) $9,329.61 
E) None of these B

Question 3

Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of:

Accepted Answer

A) $207,270.95 
B) $207,720.59 
C) $207,720.95 
D) $207,270.59 
E) None of these 
A) $207,270.95 
B) $207,720.59 
C) $207,720.95 
D) $207,270.59 
E) None of these B

Question 4

The amount of the down payment one makes on a home directly affects the size of the monthly payment.

Accepted Answer

A) True 
 B)False

Question 5

A biweekly mortgage results in six extra payments per year.

Accepted Answer

A) True 
 B)False

Question 6

Graduated payments result in the borrower paying:

Accepted Answer

A) More at the beginning of the mortgage 
B) Less at the beginning of the mortgage 
C) Less at the end of the mortgage 
D) The mortgage at 1/2 the standard rate 
E) None of these 
A) More at the beginning of the mortgage 
B) Less at the beginning of the mortgage 
C) Less at the end of the mortgage 
D) The mortgage at 1/2 the standard rate 
E) None of these

Question 7

Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is:

Accepted Answer

A) $11,029.20 
B) $11,920.20 
C) $919.10 
D) $18,782.40 
E) None of these 
A) $11,029.20 
B) $11,920.20 
C) $919.10 
D) $18,782.40 
E) None of these

Question 8

Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

Accepted Answer

A) $800 
B) $3,200 
C) $2,400 
D) $1,600 
E) None of these 
A) $800 
B) $3,200 
C) $2,400 
D) $1,600 
E) None of these

Question 9

From the table in the handbook, the monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12.

Accepted Answer

A) True 
 B)False

Question 10

Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

Accepted Answer

A) $1,776 
B) $1,402 
C) $1,240.80 
D) $1,420.80 
E) None of these 
A) $1,776 
B) $1,402 
C) $1,240.80 
D) $1,420.80 
E) None of these

Question 11

Graduated payments let the borrower pay more at the beginning of the mortgage and make lower payments later.

Accepted Answer

A) True 
 B)False

Question 12

Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 ½% for 30 years. Using the table in the handbook, his monthly payment is:

Accepted Answer

A) $1,319.04 
B) $1,319.40 
C) $1,216.80 
D) $1,139.40 
E) None of these 
A) $1,319.04 
B) $1,319.40 
C) $1,216.80 
D) $1,139.40 
E) None of these

Question 13

A larger down payment is needed for a 15-year fixed rate mortgage than for a 30-year fixed rate mortgage.

Accepted Answer

A) True 
 B)False

Question 14

With a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?

Accepted Answer

A) $50,236.80 
B) $5,023.68 
C) 545.76 
D) $54,576 
E) None of these 
A) $50,236.80 
B) $5,023.68 
C) 545.76 
D) $54,576 
E) None of these

Question 15

The reduction of principal each month is equal to the payment minus the interest.

Accepted Answer

A) True 
 B)False

Question 16

Beverly Frost bought a home for $190,000 with a down payment of $19,000 at 7% for 25 years. Since then the rate has risen to 9%. How much more would her monthly payment be if she bought the house at 9%?

Accepted Answer

A) $208.97 
B) $436.40 
C) $143.00 
D) $227.43 
E) None of these 
A) $208.97 
B) $436.40 
C) $143.00 
D) $227.43 
E) None of these

Question 17

Banks cannot provide amortization schedules to borrowers.

Accepted Answer

A) True 
 B)False

Question 18

Abby's monthly payment is $781.60 per month. The principal is $80,000 at a rate of 11 1/2% for 35 years. The principal reduction after the first mortgage payment is $14.93.

Accepted Answer

A) True 
 B)False

Question 19

A variable rate mortgage is always fixed.

Accepted Answer

A) True 
 B)False

Question 20

Subprime loans are very safe.

Accepted Answer

A) True 
 B)False

Exam 15: The Cost of Home Ownership

Interest is equal to principal times rate divided by time.

Darlene Ramirez bought a home for $140,000. She put 20% down with a mortgage rate at 7.5% for 25 years. Her yearly payments are:

Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of:

The amount of the down payment one makes on a home directly affects the size of the monthly payment.

A biweekly mortgage results in six extra payments per year.

Graduated payments result in the borrower paying:

Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is:

Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

From the table in the handbook, the monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12.

Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

Graduated payments let the borrower pay more at the beginning of the mortgage and make lower payments later.

Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 ½% for 30 years. Using the table in the handbook, his monthly payment is:

A larger down payment is needed for a 15-year fixed rate mortgage than for a 30-year fixed rate mortgage.

With a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?

The reduction of principal each month is equal to the payment minus the interest.

Beverly Frost bought a home for $190,000 with a down payment of $19,000 at 7% for 25 years. Since then the rate has risen to 9%. How much more would her monthly payment be if she bought the house at 9%?

Banks cannot provide amortization schedules to borrowers.

Abby's monthly payment is $781.60 per month. The principal is $80,000 at a rate of 11 1/2% for 35 years. The principal reduction after the first mortgage payment is $14.93.

A variable rate mortgage is always fixed.

Subprime loans are very safe.

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