HDFS 2483 --- CHAPTER 7

Which of the institutions are used by people who buy cars on credit for availing auto loans?

banks credit unions dealers

The range of negotiation is determined with a new car by knowing the ____ price and the ______ cost.

sticker; dealer

Which of the following are disadvantages associated with renting?

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

Private mortgage insurance (PMI) is often required to be purchased when you borrow more than ____ of the value of your home.

80%

Which of the following statements is NOT true?

A point equals 5% of the loan amount

Which of the following are advantages of renting?

Minimal financial commitment Easy to move (mobility)

Which of the following is NOT true?

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

T/F Lease payments are often less than loan payments.

True

Which of the following is NOT true about adjustable-rate mortgages?

Your payments are fixed over the life of the loan

One possible _____of leasing an automobile is the smaller upfront cash outlay (i.e., security deposit).

advantage

The term used to describe the final steps of buying a home is called a:

closing

True or false: Home equity loans are typically used to be help pay down mortgages.

false

What type of mortgage keeps the payments the same throughout the loan.

fixed rate

The benefits of an adjustable rate mortgage include all of the following EXCEPT

fixed rates on loans

When seeking a real estate agent, it is important to consider the agent's (select the options that may apply)

knowledge of the community willingness to market your property

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

marketing your house on various websites

Early in a person' s career renting is advantageous because renting offers

mobility

Which of the following are disadvantages of renting?

no tax deduction for property taxes No tax deduction for mortgage interest Limitation regarding remodeling

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

payment

Some of the most important factors when selecting a home (after determining what you can afford to pay) is the

school systems location of the house insurance

A home equity loan can sometimes be referred to as a _____ mortgage.

second

The advantages of owning a home include:

tax benefits personalized living location stability of residence

Renters have fewer responsibilities than home owners because:

tenants are not responsible for maintenance or repairs

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

true

The first step in buying a car is to understand what kind of car you _____ versus the type of car you need.

want

What are some of the disadvantages of home ownership?

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

To determine the value of a used car, you can research its value with which of the following sources:

- NADA - Kelley Blue Book - Consumers Reports

When using a broker to sell a house, you will typically pay ____ of the selling price.

5-7%

Potential home owners without children should evaluate school systems of the municipalities where they might live because:

good schools translate to rising property values

One of the main reasons for not taking out a second mortgage is:

you might lose your home

How many months does it take to recover your $3,000 refinancing costs if you can lower your payments from $1,400 to $1,200?

15

New cars on average lose about ____ of their value after their first year being owned.

20%

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

Appraisal fee Title search fee Home inspection

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

How much would you have to pay the bank if you took out a home mortgage of $200,000 with 2 points.

$4,000

Which of the following are drawbacks of leasing an automobile?

- Costs incurred for certain repairs - Cost incurred for extra mileage - No ownership interest in the vehicle

Which of the following are main services offered by a real estate agent?

- Helping you negotiate a price for a home - Recommending other advisers to help you with the process of buying or selling a home

Private mortgage insurance (PMI) is required when the down payment is less than:

20%

The most common amount for a down payment is ____ of the purchase price.

20%

What amount of the purchase price is typically required for a down payment when getting an auto loan?

20%

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

30 20 10 15

Your debt-to-income ratio should not exceed _____ after you take out an auto loan.

36%

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

Less maintenance than owning Easy to move (mobility) Minimal financial commitment

A car with a total purchase price of $12,000 is available while a comparable model can be leased for $350 a month for 36 months with end-of-lease costs of $800. Which arrangement should you choose?

The outright purchase because its cost is lower.

The type of loan where the payments are amortized over a longer period than the actual loan period.

balloon

One drawback of an adjustable-rate mortgage (ARM) is that the monthly payment may increase in future years if interest rates increase.

true

One of the reasons why renting offers fewer financial benefits than home ownership is that rent is not tax deductible while the interest on mortgage payments is.

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

True or false: One point is equal to 1% of the loan amount.

true

When considering the purchase of a used car, an effective road test should consider:

- listening for smoothness of acceleration and transmission - checking brakes at different speeds - visibility

Banks, credit ______, and dealers are all sources of car loans.

unions

True or false: One of the best ways to maximize the value of your trade-in car is to keep track of the maintenance work you have done.

true

True or false: The drawback of an ARM is that monthly payments may be higher in the future.

true

True or false: The drawbacks of leasing an automobile include no ownership in the vehicle and costs for extra mileage, for certain repairs, and for turning the car in early.

true

Two important sources of used car prices are NADA and the Kelley Blue Book.

true

Which of the following are the most important three considerations when evaluating a local school system?

Achievement level of students Program variety School funding