Pers Finance 9

TF A security deposit is a fee charged to help you find an apartment or house to rent.

False

TF An appraisal refers to the price for which a home has been sold.

False

TF An escrow account is designed to reduce the cost of a mortgage

False

The purpose of a security deposit is to

Pay for potential damages

A cost associated with home buying would be

Property Taxes

A cooperative housing arrangement involves

an NPO

A real estate agent can best assist a homebuyer by

assisting in getting a mortgage

A newly married couple is having trouble affording a home. What type of mortgage arrangement would reduce the monthly payment as a result of an interest rate subsidy from a builder or real estate developer?

buy down

Otto Putman rents a living unit as a result of his membership in a nonprofit housing organization. What name is commonly used for this type of housing?

cooperative housing

Which document is used to transfer ownership of property from one party to another?

deed

The purpose of an appraisal is to

estimate the current value of a home

The purpose of title insurance is to

guarantee the boundaries of the property

Renting would be most appropriate for people who

have limited funds currently available

Which of the following would increase the amount that a person could afford to spend on a home?

increased family income

A common financial benefit of home ownership is

increased property value

A common opportunity cost associated with renting is

interest lost on the security deposit.

Refinancing of a mortgage is recommended when

interest rates fall

If you sell your home without the use of a real estate agent, you should still make use of a

lawyer.

The most commonly considered factor when selecting a home is the

location

The main financial benefit of renting is

lower initial costs.

The amount of mortgage a person is eligible for would be increased by

lower interest rates

Renting is more advantageous than buying a home for

lower short-term living costs.

The purpose of a counteroffer is to

negotiate the purchase price

A condominium involves

ownership of an individual living unit

What is prepaid interest charged by a mortgage company?

points

Which of the following expenses is paid from an escrow account?

property insurance

A common financial risk of home ownership is that

property value may decrease

As Wally Quinten conducts an investigation of property value factors, most real estate experts tell him that ____________ most influences the housing values in an area.

quality of schools

The purpose of zoning laws is to

restrict property use

Earnest money has the purpose of

serving as good faith by a homebuyer.

Which of the following is an example of a closing cost?

title insurance

What does it mean to sublet an apartment?

to obtain another tenant to complete a lease period

TF A balloon mortgage can help a homebuyer when interest rates are high but are expected to come down in the near future.

True

TF A buy down results in reduced mortgage payments during the first few years of the loan as a result of an interest rate subsidy from a builder or real estate developer

True

TF A lease protects the rights of both the tenant and the landlord.

True

TF Adjustable rate mortgages with a payment cap can result in a situation of negative amortization.

True

TF An FHA-insured mortgage has less risk than a conventional mortgage for the financial institution

True

TF Condominiums involve the purchase of an individual living unit rather than an entire building.

True

TF Cooperative housing involves the renting of a living unit by the people involved in ownership of the building on a nonprofit basis.

True

TF Current interest rates can affect the price of a home.

True

TF Ease of mobility is an advantage of renting.

True

TF Home improvements may contribute more to the value of the home than the cost of the renovations.

True

TF Many people believe that location is the most important factor to consider when selecting a home.

True

TF Most people select a place of residence based on available financial resources, needs, and lifestyle.

True

TF Negotiating a purchase price for a home usually involves an offer and counteroffers.

True

TF Prepaid interest may be a part of a mortgage agreement.

True

TF The amount of the down payment will affect the amount of mortgage a person can afford.

True

Which of the following is an example of a conventional mortgage?

a fixed rate mortgage

Negative amortization is the result of

a higher amount owed on the mortgage

A possible disadvantage of FHA and VA mortgages can be

a longer processing time