Personal Finance Chapter 9

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

Real estate agents will tell you that location is very important when selecting a property because there are different zoning laws in different areas.

True

The importance of preparing your home for sale is that it can make for a fast and financially favorable sale.

True

The services that a real estate agent can provide include suggesting an asking price, making potential buyers and other agents aware of your home, and screening potential buyers to determine whether they will qualify for a mortgage.

True

True or false: 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 market, and the features and condition of the home.

True

Generally speaking the ____ the credit score the _____ the mortgage rate.

higher, lower

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

lifestyle or wants

When placing an offer on a house, you should first estimate the appropriate _____ price.

market

When determining a price to offer for a home, you should estimate a market price and then ______ with the seller.

negotiate or bargain

Renting is a fairly ______ practice in the U.S. with about 35% of households living in rental units.

prevalent, common, normal, or popular

Having a place to call your own, the stability of a residence and a personalized living space all contribute to a feeling of ______ of ownership of a home.

pride, security, or freedom

In addition to showing your home and marketing it to potential buyers, real estate agents can screen potential home buyers to see if they ______ for mortgage financing.

qualify or prequalify

While most mortgage payments are fixed, ______ can be subject to increases over which the tenant has no control. (Enter only one word per blank.)

rent

Approximately 35 percent of U.S. households live in ______.

rental units

A ______ deposit provides the landlord with funds to cover the cost of any damages done to the rental unit during the lease period.

security

The factors that influence the asking price for a home include recent ______ prices of comparable homes in the area, demand for homes in the housing market, and available financing.

selling, sale, or closing

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

tax

Renting increases mobility by:

- decreasing the amount of time one is required to be financially liable for housing. - making it easier for people to get up and move. - decreasing financial investment in a home.

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

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

The factors to examine when selecting the LOCATION of an apartment include

- public transportation - schools and shopping

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

20%

Private mortgage insurance (PMI) is required when the down payment is less than ______%. This is found in the discussion of determining the amount of your down payment.

20, 22, or twenty

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 are advantages of home ownership?

- The ability to borrow against the equity in the home - Income tax savings because of property tax deductibility - Income tax savings because of mortgage interest

Which of the following can affect mortgage affordability?

- Your down payment - Mortgage rates - The amount of income you earn - The length of the loan

Interest rates drop, and by refinancing you can save $110 a month. If the closing costs on the new mortgage are $2,090, how long will it take you to recover your closing costs (as a result of the savings)?

19 months

True or false: Factors that impact the asking price for a home include recent asking prices of comparable homes in your area.

False

True or 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

True or false: A security deposit covers the cost of damages that may be done to a rental unit.

True

True or false: As a general rule, it may be wise to refinance when the interest rates on mortgages drop at least 1 percentage point below your current mortgage rate.

True

True or false: Banks, savings and loans, credit unions, and mortgage companies are common sources of mortgage loans.

True

True or false: Even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction.

True

True or false: The monthly payment amount will be higher on a 15-year loan that on a 30-year loan, but the total amount repaid will be less.

True

True or false: Two external (market) factors that affect the price of a home are the current demand for housing and the financing options (i.e., interest rates) available.

True

An old adage that the three most important factors to consider when buying a home are location, location, and location means that the ______ plays an important part in determining market value.

neighborhood, location, or area

You can save money selling your own home, but it requires an investment in ______ and effort.

time

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

two or 2

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

- 20 - 30 - 15 - 10

The opportunity costs and common trade-offs of a housing decision include which of the following?

- Cost to commute to work when you live in area that offers less expensive housing. - The loss of home-buying tax advantages and equity growth when you rent an apartment to be close to your work. - Interest lost on money used for down payment.

Which of the following are common sources of home mortgages?

- Credit unions - Mortgage companies - Banks - Savings and loans

Which of the following is NOT one of the benefits of home ownership?

Income tax deductibility of home repairs

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

Interest is tax deductible, but default could mean foreclosure.

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

When calculating the number of months to recover your ______ costs on a refinance of a mortgage, you divide the closing costs by the monthly savings as a result of the new lower payment. This is a one word answer.

closing, settlement, refinance, or refinancing

Payments of anywhere from 10 to 30 years are ______ for mortgages.

common

The financial aspects to be considered when selecting an apartment to lease include monthly rent, length of lease, security ______ , and cost of ______.

deposit, utilities

The most common sources for a(n) ______ payment for a home purchase include personal savings, pension plan funds, sale of investments, and assistance from relatives. (Enter only one word per blank.)

down

Renting makes job transfers ______.

easier

Like many financial decisions, when making a housing decision, you should consider what you give up in time, ______, and money as a result of the decision.

effort, energy, or interest

Buying decisions make a(n) ______ about your lifestyle.

statement

What are the disadvantages of owning a condominium?

- Monthly fees - Less privacy - Uncertain demand affecting property value

What are the advantages of owning a condominium?

- Tax benefits - Fewer maintenance responsibilities when compared to a house