Chapter 7
C. Manufactured home
10. (p. 225) Diane purchased her house and had it assembled before it was moved to her lot. She purchased a A. Condominium. B. Cooperative housing. C. Manufactured home. D. Single-family dwelling. E. Townhouse.
E
11. (p. 225) Elaine purchased her living unit in a building with five other separate units. She purchased a A. Condominium. B. Duplex. C. Manufactured home. D. Single-family dwelling. E. Townhouse.
E
12. (p. 225) Paul and Lora built their home. When they researched contractors, they paid attention to all of the following except A. Contractor's reputation and experience. B. Contractor's relationship with suppliers and subcontractors. C. Payment arrangements during construction. D. Time and payment schedules. E. Contractor's property tax payments during construction.
E
14. (p. 226) What should a home buyer consider when evaluating a house? A. Zoning laws. B. Location of businesses and future construction projects. C. School system. D. Property values of the community. E. All of these should be evaluated.
E
15. (p. 226) 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 A. Negotiating a settlement price. B. Receiving an offer from a buyer. C. Representing Ingrid at the closing. D. Showing Ingrid's home to potential buyers. E. Home appraisal.
B
16. (p. 226) Jim wants to make an offer to buy an older house. At this point, he should A. Move into the house. B. Set up a home inspection. C. Contact the seller to purchase his lawn tools. D. Close the purchase transaction. E. Sign his mortgage papers.
D
17. (p. 227) Kelly selected a home and submitted an offer to the seller. A. The seller must accept her offer. B. Her offer must have been for the asking price. C. The seller's price is affected by Kelly's need to buy. D. The seller may choose to provide a counteroffer. E. Kelly will receive earnest money when she presents the offer.
B
18. (p. 228) 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. A. appraisal B. contingency clause C. dual agent D. earnest money E. purchase agreement
A
19. (p. 238) When Nancy buys her house, the mortgage company will probably conduct a(n) A. Appraisal. B. Contingency clause. C. Dual agent. D. Earnest money. E. Purchase agreement.
D. Traditional financial guidelines suggest that your home should cost about five times your annual income.
2. (p. 218) Which of the following is NOT correct? A. Renting is usually less expensive in the short run. B. Home ownership usually has long-term financial advantages. C. Lifestyle and financial factors should be analyzed to determine if you should rent or buy. D.Traditional financial guidelines suggest that your home should cost about five times your annual income. E. Renting offers mobility.
C
20. (p. 226) 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) A. Appraisal. B. Contingency clause. C. Dual agent. D. Earnest money. E. Purchase agreement.
D
21. (p. 229) Private mortgage insurance A. Cannot be avoided. B. Is part of all mortgages. C. Is usually required if the down payment is less than 25%. D. Must be terminated automatically when the home owner's equity reaches 22% of the property value at the time the loan was initiated. E. Protects the buyer from financial loss if the value of the home increases.
A
22. (p. 230) Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the mortgage calculation included all of the following except A. Expected maintenance costs. B. The home purchase price he can afford. C. The monthly mortgage payment he can afford. D. The mortgage amount he can afford. E. All of these are correct.
E
23. (p. 230) Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called A. Amortization. B. Escrow. C. Lock. D. PMI. E. Points.
A
24. (p. 231) Ricky has a conventional mortgage. He can monitor his interest and principal payments using _____ information. A. amortization B. escrow C. lock D. PMI E. points
C
25. (p. 230) When Smee applied for a loan, he was assured that his rate would not change if he closed within a specific time period. Smee had a(n) ______ on the interest rate. A. amortization B. escrow C. lock D. PMI E. points
B
28. (p. 232) Paul is 23 years old and has a small amount to use as a down payment for his first house. He might be eligible for a(n) A. ARM. B. FHA loan. C. Negative amortization. D. Payment cap. E. VA loan.
D
29. (p. 232) Yvette has a flexible-rate mortgage that has a maximum monthly increase. This feature is called a(n) A. ARM. B. FHA loan. C. Negative amortization. D. Payment cap. E. VA loan.
E. Subletting
3. (p. 222) The opportunity to have another person take over rent payments and live in the rental unit is called (a) A. Lease. B. Lessee. C. Lessor. D. Rental agreement. E. Subletting.
E
30. (p. 233) If you do not pay back any of the loan amount for a portion of the loan period, you have a(n) A. Balloon mortgage. B. Buy-down. C. Convertible ARM. D. Growing-equity mortgage. E. Interest-only mortgage.
C
31. (p. 233) A reverse mortgage A. Is the same thing as a second mortgage. B. Offers a home buyer a home loan with a 30-year payment period. C. Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies. D. Two of these are correct. E. All of these are correct.
B
32. (p. 234) During a home purchase closing, you should A. Order an appraisal. B. Pay all closing costs, settle last-minute items, and sign documents. C. Schedule an inspection of the condition of the home. D. Sign documents and pay half of the settlement costs. E. Review zoning laws for the municipality where the home is located.
A
33. (p. 236) Which of the following is the document that transfers ownership of property from one party to another? A. Deed B. Escrow C. Mortgage D. PMI E. Points
B
34. (p. 237) Which of the following is an account used to pay property taxes and home insurance? A. Deed B. Escrow C. Mortgage D. PMI E. Points
C
35. (p. 238) Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except A. Current mortgage rates. B. Demand in the housing market. C. His original cost. D. Recent selling prices of comparable homes in the area. E. The appraised value of his home.
B
36. (p. 228) If you are selling your house by owner, you should still enlist the assistance of A. A real estate agent to help with the closing. B. A lawyer or title company to assist with the contract, closing, and other legal matters. C. Your brother-in-law to aid with legal issues of the sale. D. Two of these are correct. E. All of these are correct.
E
37. (p. 240) Which of the following is NOT correct regarding real estate agents? A. They can provide advice on features of your home to highlight. B. They handle financial aspects of the sale. C. They may include a presentation of your home on various websites. D. They may screen potential buyers to determine if they will qualify for a mortgage for your home. E. They require that you conduct your own showings.
B
38. Given the information here, what is the annual cost of owning? B. 17.900
A
39. (p. 228) Carrie bought a house five years ago for $150,000. At that time she borrowed $140,000 from her bank. The house is now worth $162,000. Her PMI will automatically be dropped when her mortgage balance drops to A. $117,000. B. $122,000. C. $140,000. D. $150,000. E. $162,000.
C) 625.00
40. If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward interest? A. $180.50 B. $625.00 C. $665.28 D. $805.50 E. $7,500.00
C. Lessor
5. (p. 222) The owner/landlord is known as the A. Lease. B. Lessee. C. Lessor. D. Renter. E. Sublease.
B. Lessee
6. (p. 222) The tenant is the A. Lease. B. Lessee. C. Lessor. D. Owner. E. Sublease.
C. An advantage is that the down payment required is less than the security deposit for a rental
8. (p. 225) Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect? A. An advantage is that Donald can deduct mortgage interest and real estate taxes. B. A disadvantage is that Donald is responsible for maintenance and costs of repairs and home improvements. C. An advantage is that the down payment required is less than the security deposit for a rental. D. A disadvantage is that real estate taxes are a major expense for home owners. E. An advantage is that Donald can paint his house bright purple with green trim to match his college's colors.
B. Cooperative housing
9. (p. 225) 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? A. Condominium B. Cooperative housing C. Manufactured home D. Single-family dwelling E. Townhouse
A) 167,597.77
Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage, how much of a mortgage loan can he afford
A
13. (p. 225) Frank and Diane want to buy a house. Which of the following do they need before they purchase a house? A. Down payment. B. Home owner's insurance. C. Mortgage interest. D. Mortgage principal. E. Real estate taxes.
D
26. (p. 229) Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have A. Amortization. B. Escrow. C. Lock. D. PMI. E. Points.
E
27. (p. 232) Because Dan served in the army, he should be eligible for a(n) A. ARM. B. FHA loan. C. Negative amortization. D. Payment cap. E. VA loan.
A. Lease
4. (p. 222) A legal document that includes information about the due date of monthly rent is called a A. Lease. B. Lessee. C. Lessor. D. Rental statement. E. Sublease.
A. Lease
7. (p. 222) This provides the tenant protection from rent increases. A. Lease B. Lessee C. Lessor D. Rental statement E. Sublease
