Chapter 7

Which of the following is a legal form of ownership where the owners pay a monthly fee for maintenance of the common areas?

A. Condominium

Which of the following is the document that transfers ownership of property from one party to another?

A. Deed

Frank and Diane wanted to buy a house. Which of the following do they need before they purchase a house?

A. Down payment

Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the mortgage calculation include all except

A. Expected maintenance costs

A legal document that includes information about the due date of monthly rent is called a

A. Lease

This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property

A. Lease

This provides the tenant protection from rent increases

A. Lease

If you are selling your house by owner, you should still enlist the assistance of

B. A lawyer or title company to assist with the contract, closing, and other legal matters

If you have an interest rate subsidy from a home builder or real estate developer, you have a(n) ___________

B. Buy-down

Madeline wants to purchase a larger house. However, she had not yet sold her current home. She may want to include a(n) ________ in her offer.

B. Contingency clause

Which of the following is a form of housing in which the units are owned by a nonprofit organization?

B. Cooperative housing

Which of the following is an account used to pay property taxes and home insurance?

B. Escrow

The tenant is the

B. Lessee

A reverse mortgage

C. Provides older homeowners a loan that pays tax-free income and is repaid when the home is sold

Which of the following is NOT a benefit of home ownership?

E. Maintenance and costs of repairs and home improvements

Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called

E. Points

Paul and Lora built their home. When they researched contractors they paid attention to all of the following except

E. Contractor's property tax payments during construction

If you do not pay back any of the loan amount for a portion of the loan period, you have a(n) ___________

E. Interest-only mortgage

Donald wanted to buy a house in the country, so he sought the advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he did have some information incorrect. Which of the following is incorrect?

C. An advantage is that the down payment required is less than the security deposit for a rental.

Which of the following is NOT correct?

C. Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image.

If you have the option to change your adjustable-rate mortgage to a fixed-rate mortgage during a certain period, you have a(n) ___________

C. Convertible ARM

Zelda is looking for a mortgage that will give her the option to change it to a fixed-rate mortgage. Which of the following will meet her criterion?

C. Convertible ARM

Opal is a real estate agent who represents the buyer as well as the seller. In some states, the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as a(n) __________.

C. Dual agent

Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except

C. His original cost

The owner/landlord is known as the

C. Lessor

When Smee applied for a loan, he was assured that his rate would not change if he closed within a specific time period. Smee had a ______.

C. Lock

Diane purchased her house and had it assembled before it was moved to her lot. She purchased a ______

C. Manufactured home

Which of the following expenses is NOT usually recommended or necessary for a tenant?

D. All of the above are expected (security deposit, utilities, insurance)

Pauline just submitted an offer on her dream home. To show that she is serious, she also included _______________.

D. Earnest money

Andrew wants a loan that will allow him to pay back his 30-year mortgage in 15 to 18 years. His best choice is _________

D. Growing-equity mortgage

If you have a mortgage that provides for increases in payments that allow the amount owed to be paid off more quickly, you have a(n) ___________

D. Growing-equity mortgage

Franklin wants to sell his house himself. Which of the following is NOT correct about his sale?

D. He should show the house only when he is home alone

What should a home buyer consider when evaluating a house?

E. All of the above should be evaluated

Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n) ________

A. ARM

Ricky has a conventional mortgage. He can monitor his interest and principal payments using _____

A. Amortization

When Nancy buys her house, the mortgage company will probably conduct a(n) _______.

A. Appraisal

If you have a mortgage that has a large final payment, you have a(n) ___________

A. Balloon mortgage

Which of the following is a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building?

B. Cooperative housing

Paul is 23 years old and has a small amount to use as a down payment for his first house. He might be eligible for a(n)____________

B. FHA loan

During a home purchase closing, you should

B. Pay all closing costs, settle last-minute items, and sign documents

Which of the following is an advantage of renting?

B. Renters have fewer responsibilities than homeowners

Jim wants to make an offer to buy an older house. At this point, he should

B. Set up a home inspection

Which of the following is a disadvantage of renting?

B. Tenants cannot take tax deductions for mortgage interest and property taxes

Most tenants sign a lease. Which of the following is part of a lease agreement?

B. The conditions under which the landlord may enter the apartment

The primary benefit of a home equity loan is

B. The deductibility of the loan interest on federal taxes

Georgina and Henry are looking at houses. Which of the following is correct?

B. They should assess the school system in the area they want to live.

Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly payments have not covered her interest owed. As a result, her home equity is decreasing because of _____________

C. Negative amortization

Private mortgage insurance

D. Must be terminated automatically when the homeowner's equity reaches 22 percent of the property value when the loan was initiated

Trenton wants to buy a house, but can only provide a 10 percent down payment. He probably will be required to have _______________.

D. PMI

Yvette has a flexible-rate mortgage that has a maximum monthly increase. This feature is called a(n) _______

D. Payment cap

Walt decided to sell the home he lived in for 50 years. The house has 2 bedrooms on the first floor, a finished basement, and a finished attic with a low ceiling. To prepare his home for sale, he should

D. Take steps to make the house appear bright and large

Kelly selected a home and submitted an offer to the seller

D. The seller may choose to provide a counteroffer

Which of the following is NOT correct?

D. Traditional financial guidelines suggest that your home should cost about 5 times your annual income

Major factors that affect the affordability of your mortgage include all except

E. Size of home

The opportunity to have another person take over rent payments and live in the rental unit is called a

E. Sublease

Which of the following is NOT correct regarding real estate agents?

E. They require that you conduct your own showings.

Elaine purchased her living unit in a building with 5 other separate units. She purchased a _______

E. Townhouse

Since Dan served in the Army, he should be eligible for a(n) _________

E. VA loan

When Ingrid was selling her house, she contacted Gabe, her real estate agent, to help her with the sale. Gabe's services include all except

E. Working for the buyer