Personal Finance Quiz 5

____ are the expenses that borrowers pay during the final step of a real estate purchase.

Closing costs -Closing costs are all expenses that borrowers ordinarily pay when a mortgage loan is closed and they receive title to the purchased property. Closing costs are like down payments: they represent money that you must come up with at the time of buying the house.

At the end of your car lease period, you intend to turn in the car, and you will not pay extra at that time based on the residual value of the car. You have a(n) _____ lease.

closed-end -The closed-end lease is often called the walk-away lease because you simply turn in the car and walk away at the end of its term, assuming that you have neither exceeded the preset mileage limit nor abused the car.

The data in a Multiple Listing Service (MLS):

consist of a comprehensive listing of properties for sale in a given community area. -A Multiple Listing Service (MLS) is a comprehensive listing, updated daily, of properties for sale in a given community or metropolitan area. A brief description of each property and its asking price are included, many of which are accompanied by photos of the property

If the interest rate and monthly mortgage payment do not change over the life of your mortgage, you have a(n):

fixed-rate mortgage. -In a fixed-rate mortgage, the rate of interest and the monthly mortgage payment are fixed over the full term of the loan

Variable auto ownership costs are dependent on the:

miles covered by the automobile. -Some operating costs are fixed regardless of how much you drive; others are variable, depending on the number of miles you drive.

If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ because of the size of the down payment.

private mortgage insurance -When the down payment is less than 20%, the lender usually requires the buyer to obtain private mortgage insurance, which protects the lender from loss if the borrower defaults on the loan.

_____ are ongoing costs of home ownership.

property taxes and insurance -Property taxes and insurance are recurring costs of home ownership. Down payments and closing costs are one-time expenses incurred on the purchase of the asset, while taxes on capital gains are incurred only when the house is sold

When a lender accepts all the risk of a loan, they usually require __% interest.

20%

Which of the following is the biggest fixed auto ownership cost?

The cost of installment loan payments -The biggest fixed cost is likely to be the installment payments associated with the loan (or lease) used to acquire the car.

With a __________ adjustable rate mortgage, there is an opportunity to switch to a fixed rate after a certain time.

convertible