Question 1

Money that is usually deposited with the lending institution for the payment of property taxes and homeowner's insurance is called:

Accepted Answer

A)  points.
B)  an escrow account.
C)  a rate cap.
D)  closing costs.
E)  a buy-down. B

Question 2

An FHA fixed-rate mortgage has low down payment requirements and is fully assumable with no prepayment penalties.

Accepted Answer

A) True 
 B)False  True

Question 3

A renter is required to pay a security deposit of $800,on which 3 percent interest will be paid.What amount would the person earn each year?

Accepted Answer

A)  $100
B)  $64
C)  $24
D)  $16
E)  $4 C

Question 4

A conventional mortgage usually has:

Accepted Answer

A)  a variable interest rate.
B)  a government guarantee.
C)  a balloon payment.
D)  equal payments.
E)  a payment cap.

Question 5

Negotiating a purchase price for a home can involve an offer and a counteroffer.

Accepted Answer

A) True 
 B)False

Question 6

Michelle Duncan wants to know what price home she can afford.Her annual gross income is $45,000.She owes $550 per month on other debts and expects her property taxes and homeowners insurance to cost $225 per month.She knows she can get an 8%,30-year mortgage so her mortgage payment factor is 7.34.She expects to make a 20% down payment.What is Michelle's affordable home purchase price? Round your answer to the nearest $100.

Accepted Answer

A)  $110,700
B)  $88,600
C)  $199,300
D)  $42,500
E)  $254,800

Question 7

A home worth $160,000 with $80,000 still owed on the mortgage would have equity of $80,000,which is ________ percent of the home's value.

Accepted Answer

A)  20%
B)  50%
C)  60%
D)  67%
E)  80%

Question 8

Which of the following would increase the amount that a person could afford to spend on a home?

Accepted Answer

A)  Increase in family income
B)  Increase in insurance payments
C)  Decrease in initial maintenance and repairs
D)  Increase in utility bills
E)  Increase in monthly living expenses

Question 9

Private Mortgage Insurance is usually required if the down payment is less than ________ percent of the purchase price of the home.

Accepted Answer

A)  5
B)  8
C)  12
D)  15
E)  20

Question 10

Explain what amortization is and how a down payment and loan duration impact it.

Accepted Answer

The answer of Explain what amortization is and how a...

Question 11

Duane Miller wants to know what price home he can afford.His annual gross income is $60,000.He has no other debt expenses and expects property taxes and insurance to cost $500 per month.He knows he can get a 6%,15 year mortgage so his mortgage payment factor is 8.43.He expects to make a 10% down payment.What is Duane's affordable home purchase price? Round your answer to the nearest $100.

Accepted Answer

A)  $148,300
B)  $177,900
C)  $151,600
D)  $197,700
E)  $1,483,000

Question 12

Which of the following is not an advantage of renting?

Accepted Answer

A)  Ease of mobility
B)  More long-term financial benefits than home ownership
C)  Fewer responsibilities for maintenance and repairs
D)  Lower initial costs
E)  No expenses related to property taxes

Question 13

Jason Smith pays monthly rent of $1,250 and an annual premium for renter's insurance of $210.He realizes that he has lost interest of $36 from paying the security deposit.What is Jason's total annual cost of renting?

Accepted Answer

A)  $246
B)  $1,250
C)  $1,496
D)  $15,000
E)  $15,246

Question 14

The purpose of a rate cap in an adjustable-rate mortgage is to limit the amount by which the interest rate can increase or decrease during the ARM term.

Accepted Answer

A) True 
 B)False

Question 15

What is the most popular form of housing?

Accepted Answer

A)  Condominium
B)  Duplex
C)  Cooperative
D)  Prefabricated home
E)  Single-family dwelling

Question 16

An appraisal refers to the price for which a home has been sold.

Accepted Answer

A) True 
 B)False

Question 17

Property taxes are based on the assessed value.Who determines this value and what can you do if you disagree with this assessment?

Accepted Answer

The answer of Property taxes are based on the assessed...

Question 18

Paula has completed a mortgage application and provided evidence of employment,income,assets owned,and existing debt to the potential lending institution.Although Paula has not even begun the process of looking at possible homes to buy,she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage.In what stage of the application process is she?

Accepted Answer

A)  Appraisal
B)  Prequalification
C)  Assessment
D)  Amortization
E)  Home inspection

Question 19

What does it mean to sublet an apartment?

Accepted Answer

A)  Increase the rent
B)  Lower maintenance costs
C)  Convert the units to condominiums
D)  Meet certain government housing regulations
E)  Obtain another tenant to take over rent payments during the lease period

Question 20

What should you consider to determine the price you offer for a home?

Accepted Answer

The answer of What should you consider to determine the...

Exam 9: The Housing Decision: Factors and Finances

Money that is usually deposited with the lending institution for the payment of property taxes and homeowner's insurance is called:

An FHA fixed-rate mortgage has low down payment requirements and is fully assumable with no prepayment penalties.

A renter is required to pay a security deposit of $800,on which 3 percent interest will be paid.What amount would the person earn each year?

A conventional mortgage usually has:

Negotiating a purchase price for a home can involve an offer and a counteroffer.

A home worth $160,000 with $80,000 still owed on the mortgage would have equity of $80,000,which is ________ percent of the home's value.

Which of the following would increase the amount that a person could afford to spend on a home?

Private Mortgage Insurance is usually required if the down payment is less than ________ percent of the purchase price of the home.

Explain what amortization is and how a down payment and loan duration impact it.

Which of the following is not an advantage of renting?

Jason Smith pays monthly rent of $1,250 and an annual premium for renter's insurance of $210.He realizes that he has lost interest of $36 from paying the security deposit.What is Jason's total annual cost of renting?

The purpose of a rate cap in an adjustable-rate mortgage is to limit the amount by which the interest rate can increase or decrease during the ARM term.

What is the most popular form of housing?

An appraisal refers to the price for which a home has been sold.

Property taxes are based on the assessed value.Who determines this value and what can you do if you disagree with this assessment?

What does it mean to sublet an apartment?

What should you consider to determine the price you offer for a home?