Chapter 8 & 9 - Key terms, Review Quiz, Quiz, etc.

Isabel would spend $200 per week on groceries for her family if she did not use coupons. Her coupons save her 10 percent of that amount. She puts the amount saved into her savings account. How much will she have in her savings account at the end of the first year? Ignore interest earnings.

$1,040

Ted pays $4,500 in real estate property taxes and is in the 28 percent tax bracket. What is the value of this federal tax deduction?

$1,260.

A credit purchase with 24 monthly payments of $78 and a down payment of $120 would have a total cost of:

$1,992

John Gleason has a 30-year mortgage with monthly payments of $790.09 at an interest rate of 6.5%. The amount of the loan is $125,000. How much of John's first payment is principal?

$113.01

Duane Miller wants to know what price home he can afford. His annual gross income is $60,000. He has no other debt expenses and expects property taxes and insurance to cost $400 per month. He knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. He expects to make a 10% down payment. What is Duane's affordable home purchase price? Round your answer to the nearest $100.

$164,800

A motor vehicle has annual depreciation of $2,000; oil changes cost $120, automobile insurance $500 annually, and license plates costs $100. What is the annual amount of the total fixed operating cost for this vehicle?

$2,600

A renter is required to pay a security deposit of $800, on which 4 percent interest will be paid. What amount would the person earn each year?

$32

Federal laws limit the amount of fraudulent charges that a consumer is liable for in the case of a lost or stolen card to:

$50

Michelle Duncan wants to know what price home she can afford. Her annual gross income is $45,000. She owes $750 per month on other debts and expects her property taxes and homeowners insurance to cost $250 per month. She knows she can get a 7.5%, 30 year mortgage so her mortgage payment factor is 6.99. She expects to make a 20% down payment. What is Michelle's affordable home purchase price? Round your answer to the nearest $100.

$76,000

Joe Johnson earns $2750 in gross salary per month. He has now debt but has estimated that his monthly payments for taxes and homeowner's insurance on a home would be $170. He wants to get a 15-year mortgage at 8.5% and wants to put down 20% in cash. What is the maximum priced home he can afford? (Refer to the mortgage payment factor table in the textbook.)

$76,142

The Homeowners Protection Act requires that a PMI policy be terminated automatically when a homeowner's equity reaches _____ percent of the property value at the time the mortgage was executed.

22

Which of the following is an example of a conventional mortgage?

A fixed-rate mortgage

Which of the following would give you an estimate of the fair market value of the home?

Appraisal

Paul Spoon has noticed that interest rates have risen in recent months. He is worried that this may make it more difficult for him to finance the purchase of a car. This would be an example of a(n) ________ factor that influences his purchasing decision.

Economic

Which type of government agencies publish materials to assist consumers with buying decisions and financial planning?

Federal, Local AND State

Kate plans to rent instead of buying her housing. Which advantage of renting will she realize?

Lower initial costs

____________ is considered a variable operating expense of an automobile.

Maintenance

Which one of these situations creates negative amortization?

Paying less than the monthly interest on a mortgage

A scam that involves malicious software or an e-mail attachment that plants a virus or worm in the user's computer or in a server that directs traffic on the Internet is called:

Pharming

What is prepaid interest charged by a mortgage company called?

Points

Carrie Howell has purchased a Toyota Camry. After she has driven it 5000 miles she takes it back to the dealer for its regular maintenance and service. She is careful to save all her receipts so she can be sure future repairs will be covered by her warrantee. Which phase of the consumer purchasing decision is she doing?

Post-purchase activities

Jennifer Garland is purchasing a home that was assembled in a factory and then moved to the living site. What type of house is Jennifer purchasing?

Prefabricated home

Paula has completed a mortgage application and provided evidence of employment, income, and existing debt to the potential lending institution. Although Paula has not even begun the process of looking at possible homes to buy, she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage. In what stage of the application process is she?

Prequalification

The average used car costs about $10,000 less than the average new car. T or F?

True

The first step in resolving a consumer complaint is to return to the place of purchase. T or F?

True

Which of the following would likely be an advantage of buying a car from a private party?

You are likely to find a car at a lower price

second mortgage

a cash advance based on the paid-up value of a home; also called a home equity loan

Ownership of an individual housing unit in a building is commonly called:

a condominium

small claims court

a court that settles legal differences involving amounts below a set limit and employs a process in which the litigants usually do not use a lawyer

deed

a document that transfers ownership of property of one party of another

A new store has opened on the edge of town. It offers Bass, Easy Spirit, Nike and other shoes at low prices. Some of the shoes are slightly irregular and there are no returns once shoes have been purchased. This is most likely an example of:

a factory outlet store

conventional mortgage

a fixed-rate, fixed-payment home loan with equal payments over 10, 15, 20, 25, or 30 years.

cooperative housing

a form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units

adjusted-rate mortgage

a home loan with an interest rate that can change during the mortgage term due to changes in market interest rates; also called a flexible-rate mortgage or a variable rate mortgage

manufactured home

a housing unit that is fully or partially assembled in a factory before being moved to the living site

class-action suit

a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice

lease

a legal document that defines the conditions of a rental agreement

rate cap

a limit on the increases and decreases in the interest rate charged on an adjustable-rate mortgage

payment cao

a limit on the payment increases for an adjustable-rate mortgage

reverse mortgage

a loan based on the equity in a home, that provides elderly homeowners with tax-free income and is paid back with interest when the home is sold or the homeowner dies

mortgage

a long-term loan on a specific piece of property such as a home or other real estate

cooperative

a nonprofit organization whose member-owners may save money on certain products or services

rebate

a partial refund of the price of a product

earnest money

a portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer

A cash advance based on the paid-up value in a home is known as:

a second mortgage

Steve Black goes to Barney's Bargain Car Barn to buy a used car. What type of used car seller is he likely dealing with?

a used car dealer

warranty

a written guarantee from the manufacturer or distributor of a product that specifies the conditions under which the product can be returned, replaced, or repaired

service contract

an agreement between a business and a consumer to cover the repair costs of a product

appraisal

an estimate of the current value of a property

Which home improvement is least likely to increase the value of your home?

an exercise room

condominium

an individually owned housing unit in a building with several such units

buy-down

an interest rate subsidy from a home builder or a real estate developer purchased by the buyer that reduces a home buyer's mortgage payment during the first few years of the loan

Private label products are those that:

are sold by one chain of stores

Earnest money is used:

as evidence of good faith by a homebuyer

Mike Jacobs is planning to lease an automobile. In an effort to minimize the price of the vehicle being leased, Mike should compare the ____________ at different leasing companies.

capitalized cost

The _____________ is price of a vehicle in a lease agreement.

capitalized cost

A(n) ____________ is an individually owned unit in a building with several such units.

condiminium

____________ are non-profit stores created by people in a neighborhood to serve their customers, who are also called members. Prices at this type of store are usually lower than at other retailers.

cooperatives

The purpose of the invoice price is to inform customers of the:

dealer's cost

The main purpose of Consumers Union is to:

evaluate the quality of products and services

There is no ability to negotiate on the price of a home you are interested in purchasing. True or False?

false

closing costs

fees and charges paid when a real estate transaction is completed; also called settlement costs

Cooperatives are most commonly organized to sell:

food

Open dating provides information on:

freshness

open dating

information about freshness of shelf life found on the package of a perishable product

title insurance

insurance that, during the mortgage term, protects the owner and lender against financial loss resulting from future defects in the title and form unforeseen property claims not excluded by the policy

Refinancing of a mortgage is recommended when:

interest rates fall

Stacia Wert-Gray is reading the labels on new cars. She discovers that one car gets 31 MPG on the highway while the other car she is looking at gets 23 MPG on the highway. Which buying strategy is Stacia pursuing?

label information

If you sell your home without a real estate agent, you should still employ the services of a(n):

lawyer

What type of warranty covers only certain aspects of the product, such as parts, or requires the buyer to incur part of the costs for shipping or repairs?

limited warranty

Nancy McClure has had a new roof put on her house. She is very unhappy with the work that has been done. She decides to take the roofing company to court because she has been unable to resolve the problem in any other manner. Nancy is using which step for resolving consumer problems?

litigation

The most commonly considered factor when selecting a home is the:

location of the home

Renting is more advantageous than buying a home when you are seeking:

lower short-term living costs.

escrow account

money, usually deposited with the lending financial institution, for then payment of property taxes and homeowner's insurance

A(n) ____________ is a long term loan on a specific piece of property.

mortgage

legal aid society

one of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney

A condominium involves:

ownership of an individual living unit

The purpose of a security deposit is to:

pay for potential damages.

Damian Walker just purchased a new vehicle. He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer. He wants to make sure this car lasts a while. What step in the purchasing process is Damian carrying out?

post purchase activities

points

prepaid interest charged by a lending institution for the mortgage; each discount point is equal to 1 percent of the loan amount

The main purpose of the Edmund's Guide is to:

provide price data

The purpose of small claims court is to:

resolve minor consumer complaints

The purpose of a rate cap with an adjustable rate mortgage is to:

restrict the amount by which the interest rate can increase

zoning laws

restrictions on how the property in an area can be used

Most consumer complaints are resolved by:

returning to the place of purchase

A home equity loan may also be referred to as a _________ mortgage/

second

A cost associated with renting would be:

security deposit

What is the most popular type of home ownership?

single family dwelling

The Sears Kenmore dishwasher is an example of a:

store brand

Legislation that requires that loan applicants be given certain information, including an estimate of closing costs, before the closing is known as:

the Real Estate Settlement Procedures Act

mediation

the attempt by an impartial third party to resolve a difference between two parties through discussion and negotiation

One of the advantages of owning your own home is:

the growth in equity while you own the home

refinancing

the process of obtaining a new mortgage on a home to get a lower interest rate

amortization

the reduction of a loan balance through payments made over a period of time

The expected value of the car at the end of the lease is:

the residual value of the car

arbitration

the settlement of a difference by a third party whose decision is legally binding

unit pricing

the use of a standard unit of measurement to compare the prices of packages of different sizes

An adjustable rate mortgage often has a lower initial interest rate than a conventional mortgage. True or false?

true

Private mortgage insurance (PMI) is usually required if the down payment on the house is less than 20 percent. True or false?

true

impulse buying

unplanned buying