BUS 121 Chapter 9

Joe Smith earns $72,000 per year. His bank uses a rule that PITI must be equal to or less than one third of gross monthly income. If his home owner's insurance is $100 per month, roughly how much of a monthly payment can Joe afford including taxes over and above the $100 for insurance?

$1,900 Reason: Correct. $72,000 / 12 months = $6,000 / 3 = 2,000 − $100 = $1,900

Which of the following are possible disadvantages of owning a previously owned home?

Significant financial commitment Possibility of significant repairs Limited mobility

What are the advantages of owning a condominium?

Tax benefits Fewer maintenance responsibilities when compared to a house

Which of the following are advantages of owning a previously owned home?

Tax benefits Pride of ownership

What are the disadvantages of owning a condominium?

Uncertain demand affecting property value Less privacy Assessment fees

Renting is a fairly commonField 1Field 1 common , Correct Unavailable practice in the United States with about 35% of households living in rental units.

common

Renting increases mobility by:

decreasing the amount of time one is required to be financially liable for housing. decreasing financial investment in a home. making it easier for people to get up and move.

Renting makes job transfers Blank______. Multiple choice question. more difficult costlier easier correct impossible

easier

Personal preferences are the foundation of a housing decisions, but Blank______ factors will modify the final choice. Multiple choice question. spiritual physical financial correct emotional

financial

What are some of the disadvantages of new home ownership?

higher living expenses than renting significant financial commitment limited mobility when compared to renting

The choice of your housingField 1Field 1 housing , Correct Unavailable to live reflects your lifestyle, needs, values, beliefs, and attitudes.

housing

The advantages of owning a manufactured home (mobile home) include which of the following?

less expensive than other options flexibility in the selection of features and appliances

Which of the following are the advantages associated with renting an apartment?

less maintenance than owning easy to move (mobility) minimal financial commitment

Your lifestyleField 1Field 1 lifestyle , Correct Unavailable, needs, desires, and attitudes are reflected in your choice of a home.

lifestyles

Which of the following are disadvantages of renting a house or an apartment?

no tax benefits limitation regarding remodeling

Approximately 35 percent of U.S. households live in Blank______. Multiple choice question. condominiums mobile homes rental units correct their own home

rental units

Renters have fewer Blank______ than homeowners since they usually do not have to be concerned with maintenance and repairs. Multiple choice question. children responsibilities correct employment opportunities families

responsibilities

Your budgeted financial obligations help dictate the appropriate amount to spendField 1Field 1 spend , Correct Unavailable on housing.

spend; allocate

The Homeowner Protection Act requires that a PMI policy be terminated when the equity reaches Blank______ of the property value at the time the mortgage was executed. Multiple choice question. 22% correct 35% 30% 25%

22

Which of the following are advantages of renting a house?

easy to move (mobility) minimal financial commitment

When selecting an apartment, rent, length of lease, security deposit, and utilities are some of the Blank______ people should consider. Multiple choice question. layout and facilities aesthetic financial aspects correct minor considerations

financial aspects

The main benefit of a conventional 30-year mortgage is (found in discussion of types of mortgage loans): Multiple choice question. variable payments. lower initial payments. fixed payments. correct flexible payments.

fixed

The opportunity costs and common trade-offs of a housing decision include which of the following?

interest lost on money used for down payment cost to commute to work when you live in area that offers less expensive housing the loss of tax advantages

Like many financial decisions, when making a housing decision, you should consider what you give up in time, effortField 1Field 1 effort , Correct Unavailable, and money as a result of the decision.

effort; energy

Which of the following are disadvantages associated with renting an apartment?

no tax benefits limitations on remodeling restrictions on pets (no pets) and certain activities

The advantages of owning a newly built home include Blank______.

pride of ownership tax benefits no previous owner, so you know the history of the home