pf exam 7-8

Total annual cost of owning =

(Annual mortgage payments + Annual property taxes + Annual homeowner's insurance + Estimated maintenance and repairs) − (Growth in equity + Tax savings + Estimated annual appreciation)

Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n):

ARM

Affordable mortgage amount =

Affordable mortgage amount = (affordable monthly mortgage payment/mortgage factor) × 1,000

Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his:

Comprehensive physical damage coverage.

Samantha was driving on the highway during a storm and hail dented her car. This damage would be covered under her:

Comprehensive physical damage coverage.

Zachary lived in a neighborhood that was known for gang activity. One day, he noticed that his car had been vandalized. This damage would be covered under his:

Comprehensive physical damage coverage.

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?

Cooperative housing

Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following

Demand in the housing market. Current mortgage rates. Recent selling prices of comparable homes in the area. The appraised value of his home.

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by:

Elaine's medical payments coverage.

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a:

Hazard.

Zach is applying for insurance for his new home. Which of the following is correct?

He should insure the building under the replacement value method to receive the full cost of repairing or replacing it.

Franklin wants to sell his house himself. Which of the following is NOT good advice about his sale?

He should show the house only when he is home alone.

Barnaby is applying for insurance for his new home. Which of the following is correct?

His coverage should be increased as construction costs rise.

Vincent is applying for insurance for his new home. Which of the following is correct?

His personal belongings should be covered with his home insurance at 55-75percent of his home's insured amount.

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:

Home appraisal.

The best place to keep a household inventory is:

In a safe deposit box.

Tom wanted to receive as many discounts on his home insurance as possible. Which of the following would provide a discount?

Installing deadbolt locks on his doors The existence of a smoke detector in his home Having a fire extinguisher in his kitchen The existence of an alarm system

f you have a $150,000, 30-year, 5 percent mortgage, how much of your first monthly payment of $805.23 would go toward interest?

Interest = Principal × Interest rate × Time = $150,000 × 5% × 1 month/12 months = $625.00.

Private mortgage insurance:

Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed.

Trenton wants to buy a house but can provide only a 10 percent down payment. He probably will be required to have:

PMI

Paul was driving his kids to a piano lesson in a 2005 minivan. While driving, he was hit by an uninsured motorist. Although Paul and his kids had only minor injuries, their vehicle was totaled. Based on this information, which of the following is correct?

Paul's uninsured motorist protection should cover the cost of injuries for Paul and his kids.

During the closing for a home purchase, you will normally do which of the following?

Pay all closing costs, settle last-minute details, and sign documents

The most common risks are:

Personal risks. Liability risks. Property risks.

The two basic types of risk that people face regarding potential property losses are:

Physical damage and damage caused by criminal behavior.

Patrick has an old car and wants to keep his insurance costs down, but he wants coverage in case he damages the property of others, including street signs and telephone poles. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?

Property damage liability coverage

A reverse mortgage:

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.

Which of the following is NOT correct about renter's insurance?

Renter's insurance covers the building and other structures on the site.

Which of the following is correct about renter's insurance?

Renter's insurance is relatively inexpensive versus homeowner's insurance. Typical coverage pays only the actual cash value of one's losses. The broad form covers personal property against perils specified in the policy. The comprehensive form protects personal property against perils not specifically excluded in the policy.

If you choose to avoid the risk of a traffic accident by not driving to work, you are using:

Risk avoidance.

The opportunity to have another person take over rent payments and live in the rental unit is called (a):

Subletting.

Which of the following is a disadvantage of renting?

Tenants cannot take tax deductions for mortgage interest and property taxes

Which of the following should affect her premium?

The amount of coverage The deductible amount The type of structure The existence of an alarm system in her home

Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?

The location of her employer

Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?

The policy would provide a maximum of $100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident.

Which of the following is a type of motor vehicle insurance available to drivers?

Towing and emergency road service coverage Rental reimbursement coverage Wage loss insurance

As a result of being an armed services veteran, Dan should be eligible for a(n):

VA

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.

contingency clause

Which of the following provides the tenant protection from rent increases?

lease

Yvette has a flexible-rate mortgage that limits the amount to which her monthly payments can rise. This feature is called a(n):

payment cap