Ch. 10 purchasing and financing a home-hoyt

chuck obtained mortgage of $90,000 to finance a $120,000 home the title search will be $400 appraisal fee $500, application fee $900, and he will pay 1% origination fee. How much are his closing costs?

$2,700

Nathaniel and Kimberley want to make an offer on a 2,200 sq. ft. home priced at $212,000 they research other home prices and find the following info: a 2,400 sq. ft. home sold for $220,000: a 1,800 sq. ft. home sold for $168,000: a 2,000 sq. ft. home sold for $185,000based on your analysis what's a reasonable offer to make on the house?

$204,600

you're considering purchasing house of 2,300 square ft. that's being offered at $238,500. After researching recent home sales in the area, you find 3 that're comparable. The first was a 2,500 sq. ft. home sold for $225,000 the second was a 2,200 sq. ft. home and sold for $200,000 and the third was a 2,000 sq. ft. home That sold for $178,000. Based on your analysis what would be a reasonable offer on the house?

$207,000

For a $72,000 mortgage at 9 percent, the monthly payments would be $730 for a 15 yr mortgage and $579 for a 30 yr mortgage what would be the total savings in interest by using a 15 yr mortgage

$77,040

One point on a $80,000 loan for the purchase of a $110,ooo home would equal

$800

Greg and Kathy are considering purchasing a home requiring a $85,000 mortgage. The payment on a 30 yr mortgage for this amount is $605. The payment for a 15 yr mortgage is $752. What is the additional amount of interest paid on the 30 yr mortgage?

$82,440

in negotiation the purchase of a home which of the following may not be included

cost of street repairs

adjustable rate mortgages are riskier than fixed rate mortgages. However, they may be useful when the interest rate is expected to ___ in the future

decrease

the first step in home buy-in process should be to

determine a realistic price range of homes you can afford

for a conventional mortgage you willl typically need a _____ of from 10-20%of the selling price of the home you're purchasing

down payment

which of the following would not be included in the closing costs

earnest money

If you obtain an FHA or VA loan you will make additonal payments each month to cover your home insurance and property taxes That will be placed in an account called a __

escrow account

In comparing a 30 and 50 year mortgage over the life of the loan you will have smaller payments but pay more interest with the 30 year loan

false

Most individuals pay for a home with a down payment of 5% or less and then obtain a mortgage to finance the rest

false

a point is a flat fee of $500 for each multiple of $100,000 That you finance on a new home

false

caps on adjustable rate mortgages refer only to the maximum fluctuation in interest rates

false

condominiums have the advantages of sharing expenses among owners and giving the owners more privacy than single-family homes

false

government-backed mortgages may require lower down payments than conventional mortgages, but usually charge higher interest rates

false

homes near areas That have just been zoned for industrial use become more valuable

false

if you think interest rates will rise in the near future you should seek an adjustable rate mortgage

false

in addition to closing costs, realtor fees of about 10% are charge when you buy a home

false

online realtor services are more convenient, but usually charge higher commissions than traditional full-service real estate companies

false

since most of the problems have already been fixed, older homes usually have lower maintenance expenses than newer homes

false

since real estate brokers are licensed and bonded, they are required to give you unbiased information about real estate purchases

false

since there is no limit on how much and how fast adjustable rate mortgages can increase, most homeowners are afraid to take out this kind of loan

false

the schedule That shows your monthly home payment and amounts applied to the principle and interest each month is called a depreciation table

false

the selection of a homes school system is only applicable if you have or are likely school-aged children

false

to simplify and speed up the home buying process, you should first give a verbal offer to see if the seller is willing to take the price you're willing to offer

false

points

fees charged by a lender as a percentage of the purchase price

Points paid at closing are for payment of

finance charges or interest

when homeowners expect That interest rates will rise, they prefer

fixed rate loans

if the interest rate on your home mortgage will not change over the life of the loan to have a ___

fixed-rate mortgage

the type of home which probably would require the lowest maintanence is a

home built by a well-known construction company

An amortization schedule shows all but the

increase in market value

over the life of a mortgage the payment to principal ____ and the portion to interest expense _____

increases, decreases

Which of the following statements is true?

loan application fees range from $100-500

if a homebuyer shops around he/she can probably avoid which of the following fees

loan origination fee

which of the following is most important when selecting a home

location

when obtaining a mortgage you should

maintain some funds for liquidity purposes to cover unanticipated bills

which of the following is true about condominiums

maintenance fees of common areas are shared

Before you buy a house you should conduct a __ to determine if the price is comparable to similar houses in the area

market analysis

in negotiation a price for the purchase of a home, you should do all the following except

offer the highest price you can afford first to get it settled quickly

homeowners association fees are not

optimal to homeowners in an area

on a fixed rate mortgage, the monthly

payment remains constant and interest rates stay the same

which of the following does not reflect the impact of a strong economy on home prices

people spend their money more conservatively

to determine how much home you can afford to purchase, you should not consider

possible future raises you will receive

all of the following except ____, can be found on a variety of web sites about mortgages

projected rate increase

a ___ is responsible for determining the value of the home as part of the loan process

real estate appraiser

Of the following fees involved in the purchase of a house, which is usually not borne by the purchaser?

realtor's commission

When purchasing a home, which of the following costs will you not incur?

realtors commission

When selling a home, which of the following costs will you incur?

realtors commission

Making extra mortgage payments does which of the following

reduces the length of the loan

the initial rate on an ARM will typically be

relatively low to benefit the homeowner

owning a home entails all of the following expenses except

renters insurance

Which of the following costs associated with home ownership is hardest to budget?

repairs

amortization schedule

schedule of payments, interest expense, and balance

Of the following criteria for selection a home, which would usually diminish the most in importance as the age of the buyers exceed 50?

school system

all of the following illustrate lessons learned during the economic 2008-09 crisis except

sellers were able to attract potential buyers by slightly reducing sales price

in an effort to stimulate the housing market some financial institutions accepted a ___ arrangement in which the proceeds of the sale of the home were less than the debt owed on the home

short-sale

when a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a ____ mortgage

subprime

When buying a home, all of the following are factors one should consider except

the existing interior paint colors

fixed rate mortgages usually have

the same interest rate

closing costs

title search and insurance, appraisal fee, and other costs

Buying a home may be the single biggest investment you will ever make, so the decision should be taken very seriously

true

For a conventional mortgage a lender typically requires a down payment of 10-20% of the homes selling price

true

In determining the amount of down payment and monthly mortgage payments you can afford you should maintain some extra funds for liquidity purposes to cover unanticipated bill

true

When buying a home, the seller pays the realtor commission, so you pay no fee for realtor services except in the form a higher purchase price

true

a good way to estimate the market value of a house is to multiply the number of square feet by the avg. price per square foot of similar homes in the area

true

a sales contract stipulates not only the price offered for a home, but also the repairs to be completed and the move-in-date requested by the buyer

true

for a long-term home loan such as 30 years the amount of principle you pay on your loan during the first few years is quite small

true

homeowner's association monthly dues generally include water, sewage, garbage, and maintenance or other amenities such as pool, clubhouse, and a tennis court.

true

if a person chooses to purchase a more expensive home, he or she may have to cut expenses in other areas such as entertainment

true

most realtors agree That location more than anything influences a homes future resale value

true

proximity to schools can increase homes values, while increased distance from schools often lowers home values

true

purchasing a condominium is an alternative to purchasing a home but also requires good decision making skills

true

real estate brokers usually offer good advice but since they have a vested interest in you buying from them you should also factoring your own judgment

true

the purchase of a home represents a potential liability if you need to move quickly and the home does not appreciate rapidly in value

true

the specific location of your home can influence the amount of property taxes and insurance you will pay

true

there are a number of different mortgages types to choose from in financing a home/condominium such as a fixed or variable loans for 15-30 years

true

when choosing a home, a convenient location can save you considerable travel time and expenses

true

your monthly payments for a house are likely to be as high as rent when you factor in mortgage payments, property taxes, homeowners insurance, and home repairs

true

which of the following is not true

veterans administration mortgages are extended to most first-time homebuyers

most home purchases are made initially

with a 10-20% down payment and a mortgage

on the purchase of a home, one "point" is equal to

1% of the amount being financed

annual property taxes for homes are usually

1-2% of the home value

the monthly payment for a 15 yr loan would be about ___ times as much as a comparable 30 year loan

1.25

during the financial crisis of 2008-09, approximately ___% of subprime mortgages had late payments of at least 30 days

25

If you wish to keep your monthly payments as low and predictable as you can you should use a

30 yr fixed rate

a market analysis is not

a guarantee of the price you will receive when selling a home

a 15 yr. mortgage compared to a 30 yr mortgage has all of the following except

a lower appraisal fee

the term ARM stands for

adjustable rate mortgage

The schedule That discloses the monthly payment That you will make, based on a specific mortgage amount, a fixed interest rate level, and maturity is called a

amortization table

which of the following is false about condominiums

an individual owner may mow the grass or make any repairs to the common areas when needed

list 4 key components of closing costs

any combo of the following: title search, title insurance, appraisal, points and origination fees

which of the following should not be considered when selecting a condominium

availability of companies That perform maintenance and repair service in the area

your home value is likely to be higher with all the following except

being in an area that's just been zoned for industrial use

when buying a home all of the following are factors one should consider except

borrow as much as the lender is willing to loan you since the mortgage interest is tax deductible and may result in a larger tax fraud

is purchasing a home and expense an investment or both

both, expense b/c interest expense and taxes are tax deductible, but it also builds equity from which a loan can also be made through appreciation

The size of a monthly payment on a mortgage is not dependent on the

broker's commission