Chapter 13
You accept a mortgage for $130,000. What finance charge will you have to pay at closing if the lender charges 2 points?
$2,600
Suppose the county requires you to pay property taxes at the rate of $14 per thousand. Your house is assessed at $200,000 by the county. How much property tax will you owe each year?
$2,800
As a general rule, your mortgage payments should not exceed _____ percent of your take-home pay.
25 to 35
As the purchaser, you pay the real estate agents' commission when you buy a home.
False
Because the mortgage lender owns an interest in most people's homes, the cost of maintenance and repairs is usually split between the homeowner and the lender.
False
Homeowners are exempt from all local zoning laws.
False
Janice and Steve bought a home five years ago for $130,000. Today, the home is worth $150,000. Which of the following statements is correct?
Janice and Steve's property has appreciated by $20,000
A title insurance policy protects the buyer from any claims arising from a defective title.
True
The value of most homes appreciates over time.
True
When you make an offer to buy a house, it becomes a binding contract only upon the seller's acceptance.
True
You do not pay tax on your home's equity until you sell the home.
True
Mortgage lenders usually offer lower interest rates in exchange for higher discount points. Whether or not this is a good deal depends mostly on ______.
how long you plan to keep your house
A serious intent to be bound to an agreement is a(n) _____.
offer
A(n) _____ is a rejection of the original offer with a listing of what terms would be acceptable.
seller's counteroffer
A(n) _______ requirement is a law that forces buildings and improvements to be constructed a minimum number of feet from streets and other properties.
setback
Because certain tax deductions lower the cost of home ownership, owning real estate is sometimes called a ________.
tax shelter
Legally established ownership of property is a _____.
title
For purposes of computing property taxes owed against your home, the city or county in which you live sets a(n) _____ value on the property.
assessed
Colleen purchases a home for $225,000. If she makes a down payment of 20 percent, what will the amount of Colleen's mortgage be?
$180,000
If you buy a home for $175,000, how much down payment will you need to make if the lender requires a down payment of 15 percent?
$26,250
Sven purchases a house valued at $80,000 and has a mortgage of $65,000. Several years later he decides to sell the house. The market value of the house has increased to $110,000 and his loan debt is down to $50,000. What is Sven's equity in the house?
$60,000
Real estate agents earn income based on a percentage of the home sale price, usually between _____ percent.
6 to 8
If a title is clear, that means that no one currently owns the property and the purchaser may legally buy it.
False
The interest you pay on your home loan is tax-deductible, but property taxes are not.
False
An offer to purchase a home may be contingent on the property passing an inspection.
True
Discount points used to lower a mortgage interest rate are tax deductible and thus provide a form of tax shelter.
True
Home ownership generally offers more privacy than renting property.
True
One of the first things a real estate agent will ask a prospective homebuyer to do is to go to a mortgage lender and prequalify for a real estate loan.
True
Property insurance is usually a requirement of the loan agreement to protect the interests of the mortgage lender as well as the homeowner.
True
The recent selling price of a similar home in your area is a good estimate of the current value of your home.
True
Settlement costs—also known as ______ costs—are the expenses incurred in transferring ownership from buyer to seller in a real estate transaction.
closing
The legal document that transfers title of real property from one party to another is a(n) ____.
deed
In real estate, an offer to buy property is accompanied by a deposit called ______.
earnest money
The difference between the market value of property and the amount owed on it is called _____.
equity
A fund where money is held to pay amounts that will come due during the year—such as property taxes and property insurance—is called a(n) _____.
escrow account
A(n) _____ mortgage is a mortgage on which the interest rate does not change during the term of the loan.
fixed-rate
The ______ value of a home is the price that a ready and willing buyer and seller would agree upon.
market
A loan _____ fee is the amount charged by a bank or other lender to process the loan papers.
origination
Which of the following statements about mortgages is incorrect?
the rate for an adjustable-rate mortgage usually starts higher than the current rates for a fixed-rate mortgage
A(n) _____ is the process of checking public records to determine ownership and claims to a piece of property.
title search