Deck 9: A Home-Buying Primer: When Theory Meets the Road

Question 1

Rossi's famous work, Why Families Move, suggests that families move because of __________ factors.

A) push
B) pull
C) push-and-pull
D) environmental

Answer 1

C

Question 2

The text points out that the factors involved in the decision to move can be summarized into four categories. Which of the following is NOT one of these categories?

A) changes in the family life cycle
B) social mobility
C) attachment to the neighborhood
D) health considerations

Answer 2

D

Question 3

The text lists a number of reasons not to buy a home. Which of the following is NOT one of these reasons?

A) if the moving and front-end costs of buying a home make it a bad financial decision
B) if the real estate market is declining
C) if renting is not possible
D) if a person does not want to deal with home maintenance

Answer 3

C

Question 4

Which of the following is NOT one of the reasons given in the text for deciding to own a home?

A) Renting is always inferior to owning.
B) It is an investment.
C) There are strong cultural reasons to own.
D) Homeownership guarantees access to a whole array of social services.

Question 5

The median cost of a new single-family dwelling in 2003 was

A) $87,000
B) $97,000
C) $107,000
D) $197,600

Question 6

The rule of thumb used by banks is that long-term financial obligation should not exceed __________ percent of one's gross financial income.

A) 8
B) 18
C) 28
D) 38

Question 7

The most important factor for people in the childrearing stage of the life cycle is

A) money.
B) individual freedom.
C) the quality of schools.
D) parental cooperation.

Question 8

According to the text, which of the following is/are among the reasons to hire a broker?

A) A real estate agent can save time and mistakes.
B) If the real estate agent knows the market and city, she can steer you away from potential pitfalls.
C) A broker typically has access to the Multiple Listing Service (MLS)
D) all of the above

Question 9

In rural areas, the real estate commission can be as high as __________ percent.

A) 6
B) 7
C) 8
D) 10

Question 10

__________ percent of the homes for sale in the United States are for sale by owner (FSBO).

A) Five
B) Ten
C) Fifteen
D) Between 15 and 20

Question 11

For the millions of Americans buying a home each year, finding a home is only half the challenge. The other half is

A) finding the right mortgage.
B) agreeing with one's spouse about the price.
C) whether to employ E-commerce.
D) negotiating the best deal.

Question 12

In 2002, total mortgage financing totaled

A) $100 billion
B) $500 billion
C) $2.5 trillion
D) $4.6 trillion

Question 13

Regardless of where one searches for a mortgage, the seven-step process is the same. Which of the following is NOT one of these steps?

A) check out interest rates and costs for the mortgage
B) get pre-approved
C) get informal approval
D) track the mortgage until the deal is closed

Question 14

The __________ shifts risk from the lender to the borrower by adjusting the interest rate on the loan one or more times a year.

A) savings and loan financing plan
B) adjustable-rate mortgage
C) garbage cost mortgage
D) encryption mortgage

Question 15

Banks take __________ percent of the allowable housing expense figure to cover principle and interest.

A) 50
B) 60
C) 70
D) 80

Question 16

The best neighborhoods are usually out of reach for most first-time home buyers.

Question 17

Because the crime rate has been rising in the United States for the past twenty years, the majority of Americans fear crime.

Question 18

In terms of mortgage loans, prequalification and preapproval are essentially the same process.

Question 19

Housing types and neighborhoods are distributed randomly across the city.

Question 20

The text recommends a professional inspection before purchasing a home.

Question 21

The text lists fifteen steps in the process of purchasing a home. Trace this process, mentioning as many of the steps as you can.

Question 22

What are the primary variables involved in terms of deciding what kind of home you want?

Question 23

The text points out that, regardless of where you search for a mortgage, the seven- step is the same. List and briefly describe these steps.