Question 1

On an adjustable-rate mortgage (ARM), the percentage points that a lender adds to the index rate to determine the rate of interest is called the:

Accepted Answer

A)  payment cap 
B)  interest rate cap 
C)  margin 
D)  anchor 
E)  residual value 
A)  payment cap 
B)  interest rate cap 
C)  margin 
D)  anchor 
E)  residual value

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Condominiums generally cost [ more | less ] than single-family detached homes.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 3

If the lender specifies a loan-to-value ratio of 70%, then the buyer must make a 70% down payment on the purchase of a home.

Accepted Answer

A) True 
 B)False

Question 4

The _____ governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer.

Accepted Answer

A)  Equal Credit Opportunity Act 
B)  Truth-in-Lending Act 
C)  Real Estate Settlement Procedures Act 
D)  Mortgage Lenders Act 
E)  Real Estate Agents Act 
A)  Equal Credit Opportunity Act 
B)  Truth-in-Lending Act 
C)  Real Estate Settlement Procedures Act 
D)  Mortgage Lenders Act 
E)  Real Estate Agents Act

Question 5

Janet is considering the purchase of a condo for $150,000 during a recession phase, partly financed by a mortgage. She is due to retire in a few years. If she cannot make her mortgage payments on time, she is bound to incur a:

Accepted Answer

A)  neutral equity on her property. 
B)  reduced residual value of the property. 
C)  loan-to-value ratio . 
D)  foreclosure of her house. 
E)  fine from the local government. 
A)  neutral equity on her property. 
B)  reduced residual value of the property. 
C)  loan-to-value ratio . 
D)  foreclosure of her house. 
E)  fine from the local government.

Question 6

You recently bought a new home. You receive title to an individual residential unit and joint ownership of any common areas and facilities. You have purchased a:

Accepted Answer

A)  single-family home. 
B)  cooperative apartment. 
C)  condominium. 
D)  row house. 
E)  mobile home. 
A)  single-family home. 
B)  cooperative apartment. 
C)  condominium. 
D)  row house. 
E)  mobile home.

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Using an FHA mortgage to finance your home would require a [ lower | higher ] down payment than a conventional loan.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

The monthly interest on your adjustable-rate mortgage (ARM) was $690. You paid $650 as your monthly payment on the loan, leading to an increase in the principal balance. This is an example of:

Accepted Answer

A)  a growing equity. 
B)  negative amortization. 
C)  a fixed interest expense. 
D)  shrinking principal. 
E)  an indexed equity. 
A)  a growing equity. 
B)  negative amortization. 
C)  a fixed interest expense. 
D)  shrinking principal. 
E)  an indexed equity.

Question 9

Currently, it is cheaper to own a home than to rent in the United States.

Accepted Answer

A) True 
 B)False

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Longer-term auto loans have a [ lower interest rate but higher monthly payment | higher interest rate but lower monthly payment ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 11

The purchase price of the house you are buying is $140,000. A loan-to-value ratio of 80% will require a down payment of:

Accepted Answer

A)  $34,000. 
B)  $28,000. 
C)  $108,000. 
D)  $112,000. 
E)  $20,000. 
A)  $34,000. 
B)  $28,000. 
C)  $108,000. 
D)  $112,000. 
E)  $20,000.

Question 12

Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for. The lender requires that the total installment of loan payments does not exceed 35% of the monthly income. Based on Barb and Bob's financial data given below, what is the maximum monthly mortgage payment for which they can qualify?

Accepted Answer

A)  $1,400 
B)  $1,208 
C)  $1,502 
D)  $850 
E)  $500 
A)  $1,400 
B)  $1,208 
C)  $1,502 
D)  $850 
E)  $500

Question 13

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round the answer to the nearest dollar.)

Accepted Answer

A)  $12,765 
B)  $14,400 
C)  $14,079 
D)  $15,265 
E)  $16,879 
A)  $12,765 
B)  $14,400 
C)  $14,079 
D)  $15,265 
E)  $16,879

Question 14

Balloon-payment mortgages must be refinanced.

Accepted Answer

A) True 
 B)False

Question 15

The financing rate on a lease is called the:

Accepted Answer

A)  lease point. 
B)  residual rate. 
C)  money factor. 
D)  purchase option. 
E)  capitalized cost. 
A)  lease point. 
B)  residual rate. 
C)  money factor. 
D)  purchase option. 
E)  capitalized cost.

Question 16

Jacob has taken an SUV on lease from Free Cruisers Inc. for a period of 4 years. Jacob does not need to pay any extra amount when he turns in the vehicle because he didn't exceed the mileage specified in the lease and the SUV is not damaged. He has a:

Accepted Answer

A)  residual lease. 
B)  closed-end lease. 
C)  purchase option lease. 
D)  right-to-early-termination lease. 
E)  reassignment option lease. 
A)  residual lease. 
B)  closed-end lease. 
C)  purchase option lease. 
D)  right-to-early-termination lease. 
E)  reassignment option lease.

Question 17

The seller of a house typically pays the:

Accepted Answer

A)  appraisal fee. 
B)  loan application fee. 
C)  real estate agent's commission. 
D)  title search and insurance. 
E)  mortgage points. 
A)  appraisal fee. 
B)  loan application fee. 
C)  real estate agent's commission. 
D)  title search and insurance. 
E)  mortgage points.

Question 18

Dick and Jane have just purchased a house and are calculating how much money they will need when the closing day rolls around. The purchase price is $200,000. They will make a 20% down payment, and they must pay 2 points on the loan. Closing costs should be 3% of the purchase price. What is the total dollar amount they will need at closing? (Show all work.)

Accepted Answer

The total dollar amount they will need a

Question 19

A(n) _____ is provided to both buyer and seller at or before the actual closing and accounts for monies that change hands during the transaction.

Accepted Answer

A)  closing statement 
B)  contingency clause 
C)  title check 
D)  sales contract 
E)  buydown 
A)  closing statement 
B)  contingency clause 
C)  title check 
D)  sales contract 
E)  buydown

Question 20

Fees charged by lenders at the time they grant a mortgage loan are called:

Accepted Answer

A)  mortgage points. 
B)  down payments. 
C)  add-on charges. 
D)  commissions. 
E)  loan discounts. 
A)  mortgage points. 
B)  down payments. 
C)  add-on charges. 
D)  commissions. 
E)  loan discounts.

On an adjustable-rate mortgage (ARM), the percentage points that a lender adds to the index rate to determine the rate of interest is called the:

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. Condominiums generally cost [ more | less ] than single-family detached homes.

If the lender specifies a loan-to-value ratio of 70%, then the buyer must make a 70% down payment on the purchase of a home.

The _____ governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer.

Janet is considering the purchase of a condo for $150,000 during a recession phase, partly financed by a mortgage. She is due to retire in a few years. If she cannot make her mortgage payments on time, she is bound to incur a:

You recently bought a new home. You receive title to an individual residential unit and joint ownership of any common areas and facilities. You have purchased a:

The monthly interest on your adjustable-rate mortgage (ARM) was $690. You paid $650 as your monthly payment on the loan, leading to an increase in the principal balance. This is an example of:

Currently, it is cheaper to own a home than to rent in the United States.

The purchase price of the house you are buying is $140,000. A loan-to-value ratio of 80% will require a down payment of:

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round the answer to the nearest dollar.)

Balloon-payment mortgages must be refinanced.

The financing rate on a lease is called the:

Jacob has taken an SUV on lease from Free Cruisers Inc. for a period of 4 years. Jacob does not need to pay any extra amount when he turns in the vehicle because he didn't exceed the mileage specified in the lease and the SUV is not damaged. He has a:

The seller of a house typically pays the:

A(n) _____ is provided to both buyer and seller at or before the actual closing and accounts for monies that change hands during the transaction.

Fees charged by lenders at the time they grant a mortgage loan are called:

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 5: Making Automobile and Housing Decisions

On an adjustable-rate mortgage (ARM), the percentage points that a lender adds to the index rate to determine the rate of interest is called the:

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. Condominiums generally cost [ more | less ] than single-family detached homes.

If the lender specifies a loan-to-value ratio of 70%, then the buyer must make a 70% down payment on the purchase of a home.

The _____ governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer.

Janet is considering the purchase of a condo for $150,000 during a recession phase, partly financed by a mortgage. She is due to retire in a few years. If she cannot make her mortgage payments on time, she is bound to incur a:

You recently bought a new home. You receive title to an individual residential unit and joint ownership of any common areas and facilities. You have purchased a:

The monthly interest on your adjustable-rate mortgage (ARM) was $690. You paid $650 as your monthly payment on the loan, leading to an increase in the principal balance. This is an example of:

Currently, it is cheaper to own a home than to rent in the United States.

The purchase price of the house you are buying is $140,000. A loan-to-value ratio of 80% will require a down payment of:

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round the answer to the nearest dollar.)

Balloon-payment mortgages must be refinanced.

The financing rate on a lease is called the:

Jacob has taken an SUV on lease from Free Cruisers Inc. for a period of 4 years. Jacob does not need to pay any extra amount when he turns in the vehicle because he didn't exceed the mileage specified in the lease and the SUV is not damaged. He has a:

The seller of a house typically pays the:

A(n) _____ is provided to both buyer and seller at or before the actual closing and accounts for monies that change hands during the transaction.

Fees charged by lenders at the time they grant a mortgage loan are called:

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters