Personal Finance Ch 7

Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n) _______________

ARM

Mike wanted to buy a house in the country, so he sought advice from his cousin, Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect?

an advantage is that the down payment required is less than the security deposit for a rental.

When Nancy buys her house, the mortgage company will usually conduct _______________

an appraisal

Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include a(n) ________ in her offer.

contingency clause

document that transfers ownership of property from one party to another

deed

Frank and Diane want to buy a house. Which of the following do they need before they purchase a house?

down payment

If you pay an extra $100 per month on your mortgage, your total loan principal will decrease and your total interest will remain the same

false

Private mortgage insurance Is usually required if the down payment for a home is less than 30%

false

When interest rates are high and the demand for homes is low, prices of homes will likely be higher.

false

an approved mortgage application usually locks in an interest rate for 60-120 days

false

rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenant's belongings

false

th disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments

false

the purpose of an escrow account is to pay the points at closing

false

Pauline just submitted an offer on her dream home. As evidence of good faith, she also included _________________

Ernest money

When Ingrid was selling her house, she contacted Gabe, her real estate agent, to help her with the sale. Gabe's services included all fo the following except

home appraisal

Which of the following expenses is not usually incurred by a tenant?

property taxes

Jim wants to make an offer to buy an older house. At this point, he should

set up a home inspection

Which of the following is a disadvantage of renting?

tenants cannot take ax deductions for mortgage interest and property taxes.

Kelly selected a home and submitted an offer to the seller.

the seller may reject the offer and choose to provide a counteroffer

Angela wanted to rent an apartment, so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement

true

Lenny the landlord has the right to take legal action against Tina the tenant for nonpayment of rent or destruction of property.

true

renter's insurance protects the tenants by covering damage or theft to clothing, furniture, and there equipment

true