BADM 251: Chapter 5

Most lenders do not want mortgage payments plus other debt payments to exceed ____ percent of your gross monthly income.

33 - 38

Closing costs consist of __.

all of the above -loan application & loan origination fees -mortgage points -title search and insurance fees -attorneys' fees -appraisal fees

When refinancing your mortgage, you should consider

all of these -the interest rates of the old and new mortgages. -the years you expect to remain in the home. -any prepayment penalties on the old mortgage. -closing costs of the new mortgage.

____ is a reason for owning your own home.

all of these are reasons -Pride of ownership -A feeling of -permanence -A sense of stability -A tax shelter

____ is a reason for preferring to rent rather than to buy.

all of these reasons -Mobility -No maintenance worries -Lower monthly cash flows -Down payment money better used elsewhere

When you receive title to an individual unit and joint ownership of any common areas and facilities, you have purchased a

condominium

A lender will usually require a loan-to-value ratio of ____ or less for you to avoid having to pay private mortgage insurance (PMI).

80%

If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 90 percent, then the borrower must make

a minimum down payment of $10,000 plus closing costs

At the end of the lease period, you may be required to

b and c -pay for unreasonable wear and tear. -pay for additional mileage.

With a fixed-rate mortgage, only the monthly mortgage payment is fixed, not the interest rate.

false

The interest rates and monthly mortgage payments will not change over the life of your mortgage; you have a(n)

fixed-rate mortgage

____ is a fixed auto ownership cost.

installment loan & auto insurance

____ and ____ are often paid as part of one's house payment and held in an escrow account.

insurance; real estate taxes

The majority of each monthly payment at the beginning a home loan goes to pay

interest

The seller of the house typically pays the

real estate agent's commission

Earnest money is the sum of money the home buyer deposits with the

seller to indicate intent of purchase

____ is an up-front, one-time cost of home ownership.

the down payment and closing costs

A closed-end lease (also known as a walk-away lease) is the most popular form of automobile lease.

true

Annual insurance costs for a home usually amount to approximately 0.25-0.50 percent of the home's market value.

true

If interest rates drop by 1-2 percent or more, experts recommend you consider the economics of refinancing your home after carefully comparing the terms of the old and new mortgages.

true