Personal Finance Chapter 7

What should a home buyer consider when evaluating a house?

A. Zoning laws. B. Location of businesses and future construction projects. C. School system. D. Property values of the community. E. All of these should be evaluated.

When Nancy buys her house, the mortgage company will usually conduct a(n)

Appraisal.

If you have an interest rate subsidy from a home builder or real estate developer, you have a

Buy-down.

Which of the following is a form of housing in which the owners pay a monthly fee for maintenance of the common areas?

Condominium

Which of the following is a form of housing in which the units are owned by a nonprofit organization?

Cooperative housing

Which of the following is the 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.

Opal is a real estate agent who represents the buyer as well as the seller. In some states, the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as a(n)

Dual agent.

Pauline just submitted an offer on her dream home. As evidence of good faith , she also included a(n)

Earnest money.

Franklin wants to sell his house himself. Which of the following is NOT correct about his sale?

He should show the house only when he is home alone.

If you do not pay back any of the loan amount for a portion of the loan period, you have a(n)

Interest-only mortgage.

Which of the following is NOT a benefit of home ownership?

Maintenance and costs of repairs and home improvements

Diane purchased her house and had it assembled before it was moved to her lot. She purchased a

Manufactured home.

Private mortgage insurance

Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed.

Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly mortgage payments have not covered her interest owed. As a result, her home equity is decreasing because of

Negative amortization.

Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have

PMI.

During the closing for a home purchase , you should

Pay all closing costs, settle last-minute details, and sign documents

Yvette has a flexible-rate mortgage that limits the amount to which her monthly payments can rise. This feature is called a(n)

Payment cap.

Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called

Points.

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

Property taxes.

Which of the following is an advantage of renting?

Renters have fewer responsibilities for maintenance than home owners.

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

Set up a home inspection.

Major factors that affect the affordability of your mortgage include all of the following except

Size of the home.

Which of the following is a disadvantage of renting?

Tenants cannot take tax deductions for mortgage interest and property taxes.

Elaine purchased her living unit in a building with five other separate units. She purchased a

Townhouse.

Which of the following is NOT correct?

Traditional financial guidelines suggest that your home should cost about five times your annual income.

As a result of being an armed services veteran, Dan should be eligible for a(n)

VA loan.

Which of the following is NOT correct?

When showing the home, Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image.

Ricky has a conventional mortgage. He can monitor the reduction of his loan balance through his payments by using _____ information.

amortization

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

When Sam applied for a loan, he was assured that his rate would not change if he closed within 30 to 90 days. Sam had a(n) ______ on the interest rate.

lock

Donald 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.

Paul is looking for a low-interest, low-down payment loan for his first home, but he is not a veteran.. He might be eligible for a(n)

FHA loan.

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

Home appraisal.

This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property.

Lease

A legal document that includes information about the due date of monthly rent is called a

Lease.

A reverse mortgage

Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.

Walt has decided to sell the home he has lived in for 50 years. The house has two bedrooms on the first floor, a finished basement, and a finished attic with a low ceiling. To prepare his home for sale, he should

Take steps to remove excess furniture to make areas look larger.

Which of the following is NOT correct regarding real estate agents?

They require that you conduct your own showings.

Georgina and Henry have a family and are looking at houses. Which of the following is correct?

They should assess the school system in the area they want to live.

If you are selling your house by owner, you should still enlist the assistance of

A lawyer or title company to assist with the contract, closing, and other legal matters.

The owner/landlord is known as the

Lessor.

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.

Paul and Lora built their home. When they researched contractors, they considered all of the following except

Contractor's property tax payments during construction.

Which of the following is a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building?

Cooperative housing

Which of the following is an account used to pay property taxes and homeowner's insurance?

Escrow

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

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

Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the affordability mortgage calculation included all of the following except

Expected maintenance costs.

Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except

His original cost.

This provides the tenant protection from rent increases.

Lease

The tenant is the

Lessee.

The opportunity to have another person take over rent payments and live in the rental unit is called (a)

Subletting

Most tenants sign a lease. Which of the following is part of a lease agreement?

The conditions under which the landlord may enter the apartment.

The primary benefit of a home equity loan is

The deductibility of the loan interest on federal taxes.