personal finance 7

The Homeowner Protection Act requires that a PMI policy be terminated when the equity reaches ______ of the property value at the time the mortgage was executed.

22 percent

Every buying decision is a statement about your lifestyle.

True

A drawback of 30-year conventional mortgages is:

you will pay higher initial rates than with adjustable mortgages.

Buying a is the most expensive decision that most people will ever make.

home

FHA/VA fixed-rate mortgage typically have (low/high) down payment requirements.

low

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

the sale of investments personal savings assistance from relatives

Which of the following statements is NOT true?

A point equals 5 percent of the loan amount.

Which of the following is NOT true?

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

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

an appraisal.

The advantages of owning a home include:

personalized living location stability of residence tax benefits

Payments on a mortgage are usually made over a time period ranging from 10 to years.

30

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

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

Blank 1: interest

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

Blank 1: location

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

Blank 1: payment

A deposit is usually one month's rent that is held by the landlord to cover the cost of any damages to the rented property.

Blank 1: security

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

Condition of patio or porch Appropriate drainage system

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

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?

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

The main benefit of a conventional 30-year mortgage is:

fixed payments.

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

higher monthly payments

Generally speaking, the Blank______ the credit score the Blank______ the mortgage rate.

higher, lower lower, higher

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

invest your time and effort.

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

low down payment may be assumable with no prepayment penalties

The expenses covered by a condominium monthly fee include:

maintenance and repairs insurance for common areas improvements

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 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

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

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

10 20 15 30

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

20 percent

True or false: Home equity loan interest is only tax deductible as long as the proceeds are spent on education with the risk being that a default on the equity loan could mean foreclosure.

False

What are the disadvantages of owning a condominium?

No ownership of the outside grounds Monthly fees

During which step of the mortgage loan application process does the lender obtain a credit report and verify your application and financial status?

Step 2

Educators recommend that schools be evaluated based on which of the following?

Student achievement level

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

Ventilation for cooking Accessibility to basement and attic Adequate laundry area

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

checking account funds.

Early in a person' s career, renting is advantageous because renting offers:

mobility.

True or false: Monthly payments are typically the same across 15-, 20-, and 30-year loans.

False

The benefits of an adjustable rate mortgage include which of the following?

Lower initial rates than fixed-rate loans

Which of the following are the important considerations when evaluating a local school system?

Achievement level of students Percentage of students who go to college Program quality

True or false: Even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction.

True

Which of the following are the advantages associated with renting an apartment?

Easy to move (mobility) Minimal financial commitment Less maintenance than owning

Factors such as the size and arrangement of rooms, layout of kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting the ______ of a home.

interior design

True or false: A security deposit covers the cost of damages that may be done to a rental unit.

True

True or false: Buying a house is the most expensive decision that most people will ever make.

True

True or false: Location is considered the most important factor when buying a home.

True

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

True

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

termite inspection. title search fee. appraisal fee.

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

True

The benefits of an adjustable rate mortgage include all of the following except:

fixed rates on loans.

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

The importance of preparing your home for sale is that it can make for a fast and financially favorable sale.

True

The services that a real estate agent can provide include suggesting a selling price, making potential buyers and other agents aware of your home, and conducting showings of your home.

True

True or false: Factors that impact the asking price for a home include recent selling prices of comparable homes in your area.

True

Which of the following can affect mortgage affordability?

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

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

exterior facilities in a house.

The amount of money offered for a home depends on (select all that apply):

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

Your ______, needs, desires, and attitudes are reflected in your choice of a home.

lifestyle

One of the most important services that real estate agents provide is that they:

market your house on various websites.

True or false: Two external (market) factors that affect the price of a home are the current demand for housing and the financing options (i.e., interest rates) available.

True

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

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

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