Deck 5: Making Automobile and Housing Decisions

Question 1

Fixed automobile costs increase as the number of miles driven increase.

Answer 1

False

Question 2

One should use their emergency funds to make a larger down payment on a vehicle.

Answer 2

False

Question 3

The largest single investment you will undertake in your lifetime will probably be the purchase of an automobile.

Answer 3

False

Question 4

The sticker price is an important number to know when negotiating a good price on a new car.

Question 5

An automobile is a personal use asset for most buyers.

Question 6

Terminating a car lease before expiration is often difficult and costly.

Question 7

Most new car warranties cover a minimum of the first 36,000 miles or 3 years of ownership.

Question 8

Low-balling is a sales technique where the salesperson quotes a low price for a car to get you to make an offer,and negotiates the price upward prior to signing the sales agreement.

Question 9

Most new car warranties cover a minimum of the first 72,000 miles or 6 years of ownership.

Question 10

Gasoline is a variable cost of automobile ownership.

Question 11

Most new car warranties are void if the owner fails to perform routine maintenance on the car.

Question 12

Low-balling is a sales technique where the salesperson quotes a low price for a car then tries to get you to purchase a different,more expensive vehicle.

Question 13

The greatest fixed cost involved with owning an automobile is usually the monthly loan payments.

Question 14

The greatest fixed cost involved with owning an automobile is usually the auto insurance payments.

Question 15

Automobiles tend to decrease in value over time.

Question 16

Federal regulation requires sellers to give buyers a signed statement attesting to the fact that the mileage shown on the odometer of their used car is correct.

Question 17

Less rapid depreciation is one advantage of buying a new car rather than a used car.

Question 18

You should not talk with the car dealer about a trade in until after you have negotiated the final price on the car you are purchasing.

Question 19

Most experts highly recommend service contracts,sometimes called buyer protection plans,for new cars.

Question 20

A closed-end automobile lease is the most popular type of lease.

Question 21

When negotiating either an auto purchase or a lease,do not reveal what you can afford to pay per month.

Question 22

Townhome,condominium and co-op owners can deduct real estate taxes and mortgage interest on their federal income taxes.

Question 23

When testing driving a car,it is recommended to make sure it fits into your garage,especially if you're interested in a larger SUV or truck.

Question 24

The term condominium refers to a style of architecture.

Question 25

Condominium and Townhome owners can deduct real estate taxes and mortgage interest on their federal income taxes but co-op owners cannot take these deductions.

Question 26

You should secure the trade in value of your current automobile before you start negotiating the final price on the car you are purchasing.

Question 27

To make a legally binding offer on a car,you must sign a sales contract that specifies the offering price and all the conditions of your offer.

Question 28

One who leases an automobile is typically responsible for early termination costs,even when early termination is due to theft or auto accidents.

Question 29

When buying a used car,it is very important to have it checked by a reputable mechanic.

Question 30

Early termination clauses on an auto lease typically apply to cars that are stolen or totaled in an accident as well as when you just want to return the vehicle before the end of the lease.

Question 31

The latest model used cars are typically sold by independent used car lots.

Question 32

Capitalized cost on an auto lease is similar to the interest rate on a loan.

Question 33

No-haggling pricing on a vehicle generally ensures buyers pay the lowest price.

Question 34

If the manufacturer is offering a rebate on a vehicle,the rebate should be deducted from the dealer's cost when negotiating the price.

Question 35

Start the negotiating process for either a purchase or a lease by telling the salesperson how much monthly payment you can afford.

Question 36

The largest single investment you will undertake in your lifetime will probably be the purchase of a house.

Question 37

The money factor on an auto lease is similar to the interest rate on a loan.

Question 38

Capitalized cost on an auto lease is the same as the price of the car.

Question 39

The sales contract on an automobile purchase contractually binds you to purchase the car at the price you offered in the contract.

Question 40

Financially,you will generally do better by selling your old vehicle yourself rather than trading it in.

Question 41

You will need to purchase homeowners insurance equal to the purchase price of the house you are buying.

Question 42

You can deduct mortgage interest and property taxes on your home to reduce your federal income taxes only if you itemize deductions.

Question 43

The federal income tax advantage gained from home ownership will depend on the amount of deductible interest and property taxes and your total income.

Question 44

The down payment is typically the only substantial housing cost that must be paid at the time of the purchase.

Question 45

As a homeowner,the federal government allows you to deduct interest expenses and taxes paid on the property.

Question 46

A lender will generally require mortgage insurance if the down payment is less than 20 percent.

Question 47

The difference between the market value of your home and the balance of the mortgage is your equity in the property.

Question 48

There are large regional differences in the price of housing.

Question 49

Condominiums and townhomes are generally less costly than single-family,detached homes.

Question 50

In a condominium and townhome,the buyer receives title to an individual unit and joint ownership of the common areas.

Question 51

A significant legal difference between a cooperative and a condominium is that the condominium owner normally holds a title to the property.

Question 52

An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate of inflation.

Question 53

The market price of a house is $125,000 and the homebuyer will borrow $100,000.Two points will equal $2,000.

Question 54

The market price of a house is $125,000 and the homebuyer will borrow $100,000.Two points will equal $2,500.

Question 55

The monthly mortgage payment divided by your monthly gross income equals an affordability ratio.

Question 56

A loan-to-value ratio of 80 percent would require a buyer to make a 20% down payment.

Question 57

A 5 percent down payment will result in larger monthly mortgage payments than a 10 percent down payment on the same house for the same maturity mortgage.

Question 58

A loan-to-value ratio of 90 percent would require a buyer to make a 90% down payment.

Question 59

A condominium or townhome buyer will make monthly mortgage payments as well as pay a fee for services and maintenance of common areas.

Question 60

In a co-op,the buyer receives title to a unit and joint ownership of the common areas.

Question 61

First-time homebuyers can withdraw up to $10,000 from an IRA without penalty regardless of their age.

Question 62

The realtor's fee is usually paid by the home seller.

Question 63

Private Mortgage Insurance (PMI)protects the lender from loss on a loan.

Question 64

If a buyer withdraws from a transaction without a valid reason after signing a sales contract,he typically loses his earnest money.

Question 65

The job of a mortgage banker is to locate conventional loans for clients.

Question 66

A real estate sales contract contains the terms and provisions which establish the sale's transaction.

Question 67

The real estate commission charged for selling new homes than is generally lower than for selling previously occupied homes.

Question 68

Points paid when a home is refinanced can all be deducted as interest in the year they are paid.

Question 69

The most common commission paid to the realtor to sell your property is approximately 3 to 5 percent.

Question 70

Soon after signing a sales contract,homebuyers often have buyer's remorse as they question whether they have done the right thing.

Question 71

The interest rate charged on adjustable-rate mortgages will change from time to time based on a specified index.

Question 72

Earnest money deposits and contingency clauses are usually specified in the sale contract.

Question 73

A PITI payment is composed of principal,interest,real estate taxes,and insurance.

Question 74

First-time homebuyers can withdraw up to $25,000 from an IRA without penalty if they are 30 years of age or less.

Question 75

If you are buying a house that is for sale by the owners,the earnest money goes directly to the seller.

Question 76

The cost of a title search and title insurance are typically part of the closing costs on a housing transaction.

Question 77

To be legally binding,real estate buy-sell agreements must be in writing,but leases may be oral.

Question 78

If a renter and a homeowner lived in housing units of similar size and type,the owner would probably have greater monthly costs initially.

Question 79

Swimming pools are home improvements that generally enhance the resale value of a home dollar for dollar.

Question 80

Security deposits are controlled by the tenant.