PF Chapter 7

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

30 15 10 20

Which of the following statements is NOT true?

A point equals 5 percent of the loan amount.

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.

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

Interest is tax deductible, but default could mean foreclosure.

What are some of the disadvantages of home ownership?

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

Which of the following are disadvantages associated with renting?

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

The most common sources for a down payment include all of the following except:

checking account funds.

In the context of the home inspection as part of the home-buying process, identify elements of interior design.

Ventilation for cooking Adequate laundry area Accessibility to basement and attic

The one drawback of a conventional 15-year or 20-year mortgage when compared to a 30-year mortgage is:

higher monthly payments

You can sell your home on your own but you must be prepared to:

invest your time and effort.

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

personal savings the sale of investments assistance from relatives

A drawback of 30-year conventional mortgages is:

you will pay higher initial rates than with adjustable mortgages.

Factors such as the material quality and condition of the building, the condition of the foundation, roof and gutters, and the type of chimney are part of the:

exterior construction

Factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and the outdoor lighting are part of the:

exterior facilities

Quality of landscaping, trees, and shrubs are part of the:

exterior facilities in a house.

The main benefit of a conventional 30-year mortgage is

fixed payments.

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

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

The amount of money offered for a home depends on

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

In the context of the home inspection as part of the home-buying process, identify elements of exterior facilities.

Appropriate drainage system Condition of patio or porch

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

Blank 1: Private

Conventional 15- or 20-year mortgages have faster ____________ buildup, which is a key advantage over a 30-year mortgage.

Blank 1: equity

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

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

TRUE

Which of the following is NOT true?

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

The most important factor when buying a home is said to be the home's________________

location

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

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

Conventional 30-year mortgages provide certainty regarding principal and ___________ payments.

Blank 1: interest

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

Blank 1: payment

Which of the following can affect mortgage affordability?

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

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

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

*appraisal fee. *title search fee. *termite inspection.

The benefits of a conventional 15-year or 20-year mortgage usually include:

*a quicker pay-off of the loan than a 30-year amortization *a faster equity build-up than a 30-year mortgage *a lower rate than a 30-year mortgage

An estimate of the current value of the property is known as:

an appraisal.

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

TRUE

Private mortgage insurance (PMI) is required when the down payment is less than __________ of the purchase price of the home.

20 percent