Chapter 7 Smartbook
which of the following are the common terms (years) of home mortgages
- 10 - 15 - 20 - 30
in the context of the home inspection as part of the home-buying process, identify elements of exterior facilities
- appropriate drainage system - condition of patio or porch
what are some of the disadvantages of home ownership
- higher living expenses than renting - significant financial commitment - limited mobility when compared to renting
the expenses covered by a condominium monthly fee include
- insurance for common areas - improvements - maintenance and repairs
place the steps of the mortgage process in the sequence in which they occur
1. complete the mortgage application and present evidence of income, etc. 2. lender gets credit report, confirms financial aspects 3. mortgage is approved or denied
private mortgage insurance (PMI) is required when the down payment is less than ___ of the purchase price of the home
20 percent
payments on a mortgage are usually made over a time period ranging from 10 to ___ years
30
which of the following statements is NOT true
a point equals 5 percent of the loan amount
an estimate of the current value of the property is known as
an appraisal
the most common sources for a down payment include all of the following except
checking account funds
which of the following is NOT included among closing or settlement costs? one of these is incurred at the beginning of the process and not at the closing
credit report
homeowners can request that PMI be removed once equity has grown to 22 percent of the ___ of a home
current market value
conventional 15- or 20-year mortgages have faster ___ buildup, which is a key advantage over a 30-year mortgage
equity
factors such as the material quality and condition of the building, the condition of the foundation, roof and gutters, and the type of chimney are part of the
exterior construction
factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and the outdoor lighting are part of the
exterior facilities
quality of landscaping, trees, and shrubs are part of the
exterior facilities of a house
a condominium is a type of building structure and not a legal form of ownership
false
home equity loan interest is only tax deductible as long as the proceeds are spent on education with the risk being that a default on the equity loan could mean foreclosure
false
monthly payments are typically the same across 15-, 20-, and 30-year loans
false
the one drawback of a conventional 15-year or 20-year mortgage when compared to a 30-year mortgage is
higher monthly payments
the act that requires that PMI (private mortgage insurance) be removed automatically once equity in the home reaches 22 percent is known as the
homeowners protection act
conventional 30-year mortgages provide certainty regarding principal and ___ payments
interest
how could the tax benefit and risk of a home equity loan best be described
interest is tax deductible, but default could mean foreclosure
factors such as the size and arrangement of rooms, the layout of the kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting the ___ of a home
interior design
you can sell your home on you own but you must be prepared to
invest your time and effort
your ___, needs, desires, and attitudes are reflected in your choice of a home
lifestyle
the most important factor when buying a home is said to be the home's ___
location
FHA/VA fixed-rate mortgage typically have ___ (low/high) down payment requirements
low
the benefits of an adjustable rate mortgage include which of the following
lower initial rates than fixed-rate loans
one of the most important services that real restate agents provide is that they
market your house on various websites
early in a person's career, renting is advantageous because renting offers
mobility
a ___ deposit is usually one month's rent that is held by the landlord to cover the cost of any damages to the rented property
security
during which step of the mortgage loan application process does the lender obtain a credit report and verify your application and financial status
step 2
educators recommend that schools be evaluated based on which of the following
students achievement level
which of the following captures the main factor to consider when refinancing a loan at a lower rate
the cost of refinancing versus the benefits (savings) of lower monthly payments
which of the following is NOT true
the initial rate offered by ARMS is usually higher than conventional mortgages
a security deposit covers the cost of damages that may be done at a rental unit
true
a security deposit covers the cost of damages that may be done to a rental unit
true
buying a house is the most expensive decision that most people will ever make
true
even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction
true
every buying decision is a statement about your lifestyle
true
two external (market) factors that affect the price of a home are the current demand for housing and the financing options (i.e., interest rates) available
true
you should consider refinancing costs in relation to the savings gained with a lower monthly payment before moving forward with refinancing
true
a drawback of 30-year conventional mortgages is
you will pay higher initial rates than with adjustable mortgages
an adjustable-rate mortgage usually has a rate cap and a ___ cap
payment
___ mortgage insurance is usually required if the down payment is less than 20 percent
private
making needed repairs, painting the interior and exterior of the home, and cleaning all rooms are strategies that can lead to a fast and financially favorable sale
true
points are prepaid interest charged by the lender and one point is equal to 1 percent of the loan amount
true
some of the factors to consider when determining a price for a home include the owner's need to sell, the time the home has been on the market, and the features and condition of the home
true
the importance of preparing your home for sale is that it can make for a fast and financially favorable sale
true
the services that a real estate agent can provide include suggesting a selling price, making potential buyers and other agents aware of your home, and conducting showings of your home
true
the main benefit of a conventional 30-year mortgage is
fixed payment
buying a ___ is the most expensive decision that most people will ever make
home
location is considered the most important factor when buying a home
true
the benefits of a conventional 15-year or 20-year mortgage usually include
- a faster equity build-up than a 30-year mortgage - a quicker pay-off the loan than a 30-year amortization - a lower rate than a 30-year mortgage
in the context of the home inspection as part of the home-buying process, identify elements of interior design
- accessibility to basement and attic - adequate laundry area - ventilation for cooking
when purchasing a home, the buyer (not the seller) can expect to pay closing costs such as
- appraisal fee - title search fee - settlement fee
the benefits of a FHA/VA fixed-rate mortgage include
- low down payment - may be assumable with no prepayment penalties
generally speaking, the ___ the credit score the ___ the mortgage rate
- lower, higher - higher, lower
the advantages of owning a home include
- tax benefits - stability of residence - personalized living location
the benefits of an adjustable rate mortgage include all of the following except
fixed rates on loans
despite its fixed payments, some borrowers will select an adjustable rate mortgage over a conventional mortgage because
the adjustable rate mortgage has lower initial payments
common sources of down payment funds to purchase a home include
- personal savings - assistance from relatives - the sale of investments
factors that impact the asking price for a home include recent selling prices of comparable homes in your area
true
which of the following are the advantages associated with renting an apartment
- minimal financial commitment - less maintenance than owning - easy to move (mobility)
which of the following are the important considerations when evaluating a local school system
- program quality - percentage of students who go to college - achievement level of students
which of the following can affect mortgage affordability
- the length of the loan - your down payment - the amount of income you earn - mortgage rates