Mortgages: Quiz

Giselle wants to buy a condo that has a purchase price of $163,000. Giselle earns $2,986 a month and wants to spend no more than 25% of her income on her mortgage payment. She has saved up $33,000 for a down payment. Giselle is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%. What modification can be made to this loan to make it a viable option, given Giselle's situation?

b. Change the interest to 5.5%

Why does it take 30 years to pay off $150,000 loan, even though you pay $1000 a month?

NOT a. Sales tax is really high for home mortgages, and that is why monthly payments are much higher than just paying off principal. OR c. Most home owners are expected to miss about half of their payments, so banks take this into account when determining the term of the loan.

Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would like to spend no more than 30% of his income on his mortgage payment. Which loan option would you recommend to Eli?

NOT b. 30 year fixed, 5% down at a fixed rate of 6.25%

If the purchase price for a house is $218,500, what is the monthly payment if you put 3.5% down for a 30 year loan with a fixed rate of 6.5%?

a. $1,332.73

Vanessa bought a house for $268,500. She has a 30 year mortgage with a fixed rate of 6.25%. Vanessa's monthly payments are $1,595.85. How much was Vanessa's down payment?

a. $9,314.45

Which term is defined as a fee charged for the use of money?

a. interest

If the purchase price for a house is $445,500, what is the monthly payment if you put 5% down for a 30 year loan with a fixed rate of 6.25%?

b. $2,605.87

Karina bought a townhouse for $199,900. She has a 30 year mortgage with a fixed rate of 5.5%. Karina's monthly payments are $998.08. What percent of the purchase price was Karina's down payment?

b. 12%

Peter wants to buy a duplex with a purchase price of $226,950. Peter can afford a 10% down payment. Peter earns $2,985 a month and wants to spend no more than 10% of his income on his mortgage payment. Peter is going to rent out the other half of the duplex. He thinks that if he charges $900 a month in rent this will cover the remainder of his mortgage payment. Given that Peter has a 30 year mortgage with a fixed rate of 6.25%, how should Peter adjust how much he charges for rent of the other half of the duplex?

b. Peter should increase the rent by $60.

If the purchase price for a house is $309,900, what is the monthly payment if you put 20% down for a 30 year loan with a fixed rate of 6%?

c. $1,486.41

Which of the following statements is true? a. A 30 year fixed mortgage will always result in the lowest payment. b. You must have at least a 20% down payment to get a competitive interest rate. c. The lower your interest rate is, the lower your monthly payments are. d. The faster you pay off your mortgage, the lower your monthly payments are.

c. The lower your interest rate is, the lower your monthly payments are.

The Williams are buying a house that costs $323,000 and can afford a 10% down payment. If the Williams want the lowest monthly payment, which loan option would you recommend?

d. 30 year fixed, 10% down at a fixed rate of 6%

Housing expenses are commonly referred to as PITI. What does PITI stand for?

d. principal, interest, taxes, insurance