Chapter 7 Study Guide
(Multiple choices) Which of the following is a form of housing in which the owners pay a monthly fee for maintenance of the common areas?
Condominium
(Multiple choices) Paul and Lora built their home. When they researched contractors, they considered all of the following except
Contractor's property tax payments during construction.
(true or false) Rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenants' belongings.
False
(Multiple choices) Which of the following is NOT a benefit of homeownership?
Maintenance and costs of repairs and home improvements
(Multiple choices) 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
(true or false) 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
(true or false) If your home is assessed for $200,000, the market value of the home should normally be less than $200,000
False
(true or false) Lease-to-purchase and rent-with-option allow homeowners to become renters
False
(true or false) Merrill bought a house and applied for a loan through the VA (Veterans Administration). The VA will provide mortgage money
False
(Multiple choices) 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
(Multiple choices) Which of the following is the document that transfers ownership of a property from one party to another?
deed
(true or false) The Real Estate Settlement Procedures Act (RESPA) requires that loan applicants be given an estimate of the closing costs after the actual closing
False
(true or false) The most common conventional mortgage is the 20-year ARM
False
(true or false) The purpose of an escrow account is to pay the points at closing
False
(true or false) When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there.
False
(true or false) Your decision to rent or to buy your residence should be based solely on lifestyle factors
False
(Multiple choices) Franklin wants to sell his house himself. Which of the following is NOT good advice about his sale?
He should show the house only when he is home alone.
(Multiple choices) A reverse mortgage
Provides older homeowners with tax-free income in the form of a loan that is repaid when the home is sold or the homeowner dies.
(Multiple choices) Which of the following is an advantage of renting?
Renters have fewer responsibilities for maintenance than a homeowner
(Multiple choices) Major factors that affect the affordability of your mortgage include all of the following except
Size of the home
(Multiple choices) The opportunity to have another person take over rent payments and live in the rental unit is called
Subletting
(Multiple choices) 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 less cluttered and therefore larger.
(Multiple choices) Which of the following is a disadvantage of renting?
Tenants can't take tax deductions for mortgage interest and property taxes
(Multiple choices) 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
(Multiple choices) The primary benefit of a home equity loan is
The deductibility of the loan interest on federal taxes.
(Multiple choices) Kelly selected home and submitted an offer to the seller
The seller may reject the offer and choose to provide a counteroffer.
(Multiple choices) 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 in.
(Multiple choices) What should a home buyer consider when evaluating a house?
Zoning laws, location of businesses, and future construction projects
(Multiple choices) Ricky has a conventional mortgage. He can monitor the reduction of his loan balance through his payments by using _____ information
amortization
(Multiple choices) If you have an interest rate subsidy from a home builder or real estate developer, you have a
buy-down
(Multiple choices) 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
(Multiple choices) Pauline just submitted an offer on her dream home. As evidence of good faith, she also included a(n)
earnest money
(Multiple choices) 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
(Multiple choices) 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
(Multiple choices) The tenant is the
lessee
(Multiple choices) 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.
(Multiple choices) 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
(Multiple choices) When Nancy buys her house, the mortgage company will usually conduct a(n)
Appraisal
(Multiple choices) 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
(Multiple choices) Which of the following is a form of housing in which the units are owned by a nonprofit organization
Cooperative housing
(Multiple choices) Frank and Diane want to buy a house. Which of the following do they need before they purchase a house?
Down payment
(Multiple choices) Which of the following is an account used to pay property taxes and homeowner's insurance?
Escrow
(Multiple choices) 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
(true or false) A condominium is a form of housing in which the units in a building are owned by a nonprofit organization
False
(true or false) A disadvantage of homeownership is the deductibility of mortgage interest and real estate tax payments.
False
(true or false) A duplex is a house with two or more separate dwellings.
False
(true or false) A landlord has the right to sublet an apartment
False
(true or false) An advantage of a second mortgage is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan
False
(true or false) An advantage of renting is the pride of ownership
False
(true or false) An approved mortgage application usually locks in an interest rate for 60-120 days
False
(true or false) As interest rates increase, more people can afford the cost of an average-priced home
False
(true or false) At the closing of a home purchase, the buyer and seller conduct a walk-through of the property
False
(true or false) Each year about 50% of home sales are made by the home's owners
False
(true or false) Home improvements will definitely increase the selling price of a house
False
(true or false) Mortgage points are paid to the lender at the end of the mortgage
False
(true or false) Most low- and middle-income people can qualify for a VA- guaranteed loan
False
(true or false) Most new mortgages are assumable
False
(true or false) Private mortgage insurance is usually required if the down payment for a home is less than 30%
False
(Multiple choices) A legal document that includes information about the due date of monthly rent is called a
Lease
(Multiple choices) Which of the following gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property?
Lease
(Multiple choices) Which of the following provides the tenant protection from rent increases?
Lease
(Multiple choices) 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.
(Multiple choices) Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have
PMI payments
(Multiple choices) Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called
Points
(Multiple choices) Which of the following expenses is NOT usually incurred by a tenant?
Property Taxes
(true or false) A handyman's special is a home that needs work and that you can get at a lower price.
True
(true or false) A real estate agent can help screen potential buyers to determine whether they will qualify for a mortgage
True
(true or false) An advantage of a buy-down is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan
True
(true or false) 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
(true or false) Lenny the landlord has the right to take legal action against Tina the tenant for nonpayment of rent or destruction of property
True
(true or false) Renter's insurance protects the tenant by covering damage or theft to clothing, furniture, and stereo equipment
True
(true or false) With a down payment of at least 5%, lenders use 33% of monthly gross income as a guideline for PITI (principal, interest, taxes, and insurance)
True
(true or false) Your lifestyle affects your housing decisions
True
(Multiple choices) As a result of being an armed services veteran, Dan should be eligible for a(n)
VA loan
(Multiple choices) 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
(Multiple choices) If you do not pay back any of the loan amounts for a portion of the loan period but are not defaulting in the loan, you have a(n)
interest-only mortgage
(Multiple choices) The owner/landlord is known as the
lessor
(Multiple choices) 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
(Multiple choices) Diane purchased her house and had it assembled before it was moved to her lot. She purchased a
manufactured home
(Multiple choices) 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
(Multiple choices) Jim wants to make an offer to buy an older house. At this point, he should
set up a home inspection
(Multiple choices) Elaine purchased her living unit in a building with five other separate units. She purchased a
townhouse
(true or false) Each year about 10% of home sales are made by the home's owners
true
(true or false) Lease-to-purchase and rent-with-option allow renters to become homeowners
true
(true or false) Normally, if your home is assessed for $200,000, the market value of the home should be more than $200,000
true
(true or false) a renter has the right to sublet an apartment
true