fin 125 ch 7

Which of the following are the common terms (years) of home mortgages?

10 15 30 20

Which of the following can affect mortgage affordability?

The length of the loan Mortgage rates Your down payment The amount of income you earn

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

FHA/VA fixed-rate mortgage typically have (low/high) down payment requirements.

low

Common sources of down payment funds to purchase a home include:

the sale of investments assistance from relatives personal savings

When purchasing a home, the buyer (not the seller) can expect to pay closing costs such as:

-settlement fee. -title search fee. -appraisal fee.

The advantages of owning a home include:

personalized living location tax benefits stability of residence

Aubrie is going to make a 22% down payment on her house. If her affordable mortgage amount is $212,476.35, what is Aubrie's affordable home purchase price?

$272,405.58 Affordable home purchase price = $212,476.35/(1 − 0.22) = $272,405.58

The benefits of a FHA/VA fixed-rate mortgage include:

-low down payment -may be assumable with no prepayment penalties

Place the steps of the mortgage process in the sequence in which they occur.

1. complete the mortgage 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 Blank______ of the purchase price of the home.

20 percent

Which of the following statements is NOT true?

A point equals 5 percent of the loan amount.

According to the video, all of the following are seller estimated costs, except:

Appraisal fee

According to the video, all of the following are other options to consider when you finance your home, except:

Buy-Backs

The title search fee is paid by the _________ and is designed to ensure that the ___________ can legally purchase the property.

Buyer; buyer The title search fee is paid by the buyer and is designed to ensure that the buyer can legally purchase the property.

All of the following are true about conventional mortgages discussed in the video, except:

Each monthly payment is fixed for a set period of time and then they may adjust if the market interest rate has risen. Conventional Mortgages:• Mortgage length is typically 15, 20, or 30 years.• Down payments are usually 5 to 10 percent.• There is no flexibility in the monthly payments and it does not change over the life of the loan. Each payment has a portion of principal and interest, with larger principal amounts at the end.• Higher initial interest rates than adjustable mortgages.

According to the video, the decision to rent or buy a home is an important decision that can affect not only your ________________, but also your _________________.

Financial decisions; quality of life

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. Homeowners Protection Act requires that once equity in the home reaches 22 percent, PMI should be automatically removed.

According to the video, which of the following is an advantage of renting a home?

Individuals can rent a home with a smaller financial commitment than if you were to buy a home, It is easy to move or change homes if you don't like the first home, and There is less maintenance associated with renting a home.

How could the tax benefit and risk of a home equity loan best be described?

Interest is tax deductible, but default could mean foreclosure.

mortgage insurance is usually required if the down payment is less than 20 percent.

Private

What are some of the disadvantages of home ownership?

Significant financial commitment Limited mobility when compared to renting Higher living expenses than renting

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

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

All of the following are true of adjustable-rate, variable-payment mortgages according to the video, except:

There are no rate caps for this type of mortgage.

A security deposit covers the cost of damages that may be done to a rental unit.

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

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

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

Buying a is the most expensive decision that most people will ever make.

house or home

You can sell your home on your 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

Generally speaking, the Blank______ the credit score the Blank______ the mortgage rate.

lower, higher higher, lower

An adjustable-rate mortgage usually has a rate cap and a cap.

payment

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

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

You should consider refinancing costs in relation to the savings gained with a lower monthly payment before moving forward with refinancing.

true

According to the video, all of the following is a disadvantage of buying a home, except:

It can be hard to maintain ownership of the home.

Factors that impact the asking price for a home include recent selling prices of comparable homes in your area.

True

According to the chart in the video, what is reported at the bottom of the statement?

n/a

Mason is applying for a 30-year mortgage with a 5% interest rate. Mason has an annual income of $50,000 and has no additional debt. His estimated monthly property taxes and homeowners insurance is equal to $430. What is Mason's affordable mortgage amount?

$175,977.65

Payments on a mortgage are usually made over a time period ranging from 10 to years.

30 or thirty

Which of the following are disadvantages associated with renting?

Limitations on remodeling No federal tax benefits Restrictions on pets (no pets) and certain activities

Which of the following is NOT true?

The initial rate offered by ARMS is usually higher than conventional mortgages.

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

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

People who have very little money in savings will probably rent housing rather than purchase it.

True

Points are prepaid interest charged by the lender and one point is equal to 1 percent of the loan amount.

True

Paisley has an annual income of $54,600 and has additional debt of $350. Her estimated monthly property taxes and homeowners insurance is equal to $390. What is Paisley's affordable monthly mortgage payment?

989 first divide 54,600 by 12 then multiple that number by 38% (33% with no debt) next subtract other debt = $989.00

Homeowners can request that PMI be removed once equity has grown to 22 percent of the _____ of a home.

current market value.

Location is considered the most important factor when buying a home.

True

One of the most important services that real estate agents provide is that they:

market your house on various websites.

The amount of money offered for a home depends on:

the time the home has been on the market. features of the home. recent selling prices of homes in the area.