Finance Chapter 7 Final

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

The annual rental payments for an apartment are $16,000 plus renter's insurance of $300 and the lost interest on the security deposit of $100. A comparable home mortgage would cost about $22,000 per year. How much will the rental option cost?

$16,400

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

-assistance from relatives -personal savings -the sale of investments

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

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

What are some of the disadvantages of home ownership?

-higher living expenses than renting -limited mobility when compared to renting -significant financial commitment

Which of the following are advantages of buying housing?

-many remodeling or customization possibilities -significant tax benefits

Which of the following are disadvantages associated with renting?

-no federal tax benefits -restrictions on pets (no pets) and certain activities -limitations on remodeling

Place the steps of a mortgage process in the sequence in which they occur:

1. Complete the mortgage application and present evidence of income, etc. 2. Lender gets credit report, confirms financial aspects 3. Mortgage is approved or denied

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

10, 15, 20, 25, 30

Private mortgage insurance (PMI) is required when the down payment is less than:

20%

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%

Which of the following is NOT true?

A point equals 5% of the loan amount

Which of the following are main services offered by a real-estate agent?

Helping you negotiate a price of a home; Recommending other advisors to help you with the process of buying or selling a home

Which of them following best describes the rights of residents of cooperative housing?

The right to occupy the unit for as long as the stock is owned

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

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

Exterior construction factors include:

conditions of roof and gutters; material quality

Quality of landscaping, trees and shrubs are part of

external facilities of a house

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

invest your time and effort

The only way that interest only mortgage benefits the borrower is by

lower payments

An adjustable rate mortgage usually has a rate cap and a __________ cap

payment

The one drawback of a FHA/VA fixed-rate mortgage is:

slow processing time

The annual rental for an apartment is $16,000 with renter's insurance of $300 and an opportunity cost on the security deposit of $100. A home would carry annual mortgage payments of $16,100, property taxes of $3,000, and home owner's insurance of $1,000. The estimated annual cost of repairs and maintenance for the home is $1,500 with an opportunity cost for the down payment and closing costs of $750. You estimate that the growth in equity will be $1,500 a year and the home will appreciate in value by about $2,000 per year. Because the interest and the property insurance are tax deductible, $5,400 of tax savings should be realized each year. How much will it cost to own the house?

$13,450

Joen Smith earns $72,000 per year. His bank has a rule that PITI must be equal to or less than one third of gross monthly income. If his homeowner's insurance is $100 per month, roughly how much of a monthly payment can Joe afford including taxes over and above the $100 for insurance?

$1900

When thinking of buying your first home it is important to

-realize you may not get everything you want in the first house -consider a handy-man's special at a lower price

What are some of the living expenses (other than the rent payment) that you would incur if you were to rent a unit?

-telephone -heat -electricity

Which of the following factors have an impact on the amount you can spend to acquire a home of your own?

-your current living expenses -your income (salary, wages, investment income, etc.) -the amount of the down payment you can make

Place the steps of the mortgage process in the sequence in which they occur

1. Complete the mortgage application and present evidence of income, etc. 2. Lender gets credit report, confirms financial aspects 3. Mortgage is approved or denied

Traditional guidelines suggest that you should spend no more than ________% of your take-home pay on housing.

25 or 30%

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

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

Easy to move (mobility); Minimal financial commitment; Fewer responsibilities for maintenance

Who is most likely to benefit form a reverse mortgage?

Elderly homeowners who can take the funds in a form of a tax-free loan to live on and pay back the loan when the home is sold

A condominium is a type of building structure and not a legal form of ownership.

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

When renting, it is not recommended that one should get insurance coverage on personal property

False

When renting, it is not recommended that one should get insurance coverage on personal property.

False

What are the advantages of owning a condominium?

Fewer maintenance responsibilities compared to a house

How could the tax benefit and risk of a home equity loan be best described?

Interest is tax deductible, but default could mean foreclosure.

Which of the following home improvements are the three most desirable (i.e., they will have the greatest positive impact on the selling price)?

New energy-efficient features; Remodeled bathroom; Remodeled kitchen

Which of the following are the disadvantages of renting?

No tax deduction for property taxes; No tax deduction for mortgage interest; Limitation regarding remodeling

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

School funding; Program variety; Achievement level of students

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

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.

Which of the following is NOT true?

The government provides mortgage money on VA and FHA loans

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

Title search fee; Appraisal fee; Termite inspection

Which of the following best describes the role of a home inspector?

To review the interior and exterior construction, facilities, and design of a potential home purchase

After you vacate a rental unit, your security deposit should be refunded within a reasonable time

True

Banks, savings and loans, and mortgage companies are common sources of mortgage loans.

True

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

True

Every buying decision is a statement about your lifestyle

True

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

One drawback of an adjustable rate mortgage (ARM) is that the monthly payment may increase in future years if interest rates increase.

True

One of the reasons renting offers fewer financial benefits than home ownership is that rent is not tax deductible while the interest on mortgage payments is.

True

One of the reasons why renting offers fewer financial benefits than home ownership is that rent is not tax deductible while the interest on mortgage payments is

True

Renting is less costly in the short-run while owning a home usually has long-term financial advantages.

True

Some of the factors to consider when determining a price for a home include the owner's need to sell, the time the home has been on the marker, and the features and condition of the home.

True

Which of the following factors have an impact on the amount you can spend to acquire a home of your own?

Your income(salary, wages, investment income, etc.); The amount of the down payment you can make; Your current living expenses

Which of the following is NOT true about adjustable-rate mortgages?

Your payments are fixed over the life of a loan

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

an appraisal

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

assistance from relatives; personal savings; the sale of investments

The common areas of condominiums are not owned by the condo owner but by the condominium

association

The common areas of condominiums are not owned by the condo owner but by the condominium _________

association

Interior construction factors include the following:

condition of the water heater; condition of the heating unit; condition of stairways

Although the interest only mortgage has lower interest payments, it does not allow the borrower to

decrease the amount that is owed; build equity unless the home value increases

Interior construction can include all of the following:

ease and operation of windows; condition of plumbing fixtures

What are some of the living expenses (other than the rent payment) that you would incur if you were to rent a unit?

electricity; telephone; heat

Factors such as the material quality and condition of building, the condition of the foundation, roof and gutters, and the type of chimney are part of the:

exterior construction

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

Factors such as the appearance of the neighborhood, the quality of landscaping, the condition fo the driveway, and the outdoor lighting are part of the:

exterior facilities

The main benefit of a conventional 30-year mortgage is

fixed payments

The benefits of an adjustable rate mortgage include all of the following EXCEPT

fixed rates on loans

Potential home owners without children should evaluate school systems of the municipalities where they might live because:

good schools translate to raising property values

Generally speaking, the ________ the credit score the _________ the mortgage rate.

higher, lower; lower, higher

Homeowners, when selling their own homes, should still obtain information regarding availability of financing because

homeowners can help potential buyers know if a sale is possible

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

When seeking a real estate agent, it is important to consider the agent's

knowledge of the community; willingness to market your property

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

lifestyle

One of the most important factors when selecting a home (after determining what you can afford to pay) is the

location of the house

The benefits of a VA/FHA 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 repairs; improvements

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

marketing your house on various websites

Early in a persons' career renting is advantageous because renting offers

mobility

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

payment

Tenants are often subjected to restrictions regarding ______, and remodeling.

pets

Tenants are often subjected to restrictions regarding __________, and remodeling

pets

It is a good idea for home buyers to go first to a mortgage company and __________

pre-qualify

The tenant is protected from rental increases during the lease term unless the lease contains a __________ allowing for increases.

provision

The tenant is protected from rental increases during the lease term unless the lease contains a(n) ________ allowing for increases

provision

When thinking of buying your first homier is important to

realize you may not get everything you want in the first house; consider a handy-man's special at a lower price

Many states require that your security deposit be returned within a ____________ amount of time.

reasonable

The amount of money offered for a home depends on:

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

As part of rental activities it is important that tenants ______________________________ be documented at the end of a lease.

require deductions from the security deposit

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

security

Previously owned houses, new houses, and custom-built houses are referred to as:

single-family dwellings

The advantages of owning a home include:

tax benefits; personalized living location; stability of residence

Renters have fewer responsibilities than homeowners because:

tenants are not responsible for maintenance and repairs

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

An important security measure to take when selling your own home is to show the home when ______ or more adults are at home.

two

When it comes to the size of manufactured homes, which of the following is true?

typically these homes are smaller than 1,000 square feet

When it comes to the size of manufactured homes, which one of the following is true?

typically these homes are smaller than 1,000 square feet

A drawback of 30 year conventional mortgages is:

you will pay a relatively large amount in interest expense over 30 years


संबंधित स्टडी सेट्स

Fundamentals final exam study guide PART 1

View Set

Chapter 1: Personal Finance Basic and the Time Value of Money

View Set

International Business Law and Ethics FINAL

View Set