BUSI 1307 Chapter 5 Quiz
For most homeowners, the most important financial benefit from owning a home is that it is: a security for loans. an inflation hedge a tax shelter. a cash flow item. a psychic income.
a tax shelter.
As home prices have fallen in recent years, the rent ratio: and rent affordability have increased. and rent affordability have decreased. has increased and rent affordability has decreased has decreased and rent affordability has increased. has increased and rent affordability has stabilized.
and rent affordability have decreased.
A lender will usually require a loan-to-value ratio of _____ or less for you to avoid having to pay private mortgage insurance (PMI). 75% 80% 85% 90% 95%
80%
The loss in the value of an automobile over time is called: maintenance. the loan payment. the sales price. the purchase commission. depreciation.
depreciation.
If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ as a result of the size of the down payment. closing points a bond mortgage insurance application fees homeowner's insurance
mortgage insurance
An escrow account is used to collect _____ from one's monthly mortgage payment. interest principal real estate taxes closing costs operating expenses
real estate taxes
A real estate sales contract will include: the amount you have paid as an earnest money deposit. the terms of a mortgage loan taken from a third party. deed restrictions. the market value of the property. the current value of the cost of repairs on the house.
the amount you have paid as an earnest money deposit.
Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for. The lender requires that the total installment loan payments do not exceed 35% of the monthly income. Based on Barb and Bob's financial data given below, what is the maximum monthly mortgage payment for which they can qualify? Monthly Gross Income $4,000 Car payment $350 Student loan payment $200 $1,400 $1,208 $1,208 $850 $500
$850
_____ is a situation where homeowners owe more to lenders than what their properties are worth. A negative equity A foreclosure An adverse rent ratio Inflation A real estate short sale
A negative equity
_____ are the up-front, one-time costs of home ownership. Points Closing costs Property taxes Insurance costs Mortgage interests
Closing costs
Which of the following are tax deductible if one itemizes deductions? Principal, interest, real estate taxes, and insurance Principal, interest, and real estate taxes Principal and interest Interest, real estate taxes, and insurance Interest, insurance, and real estate taxes
Interest, insurance, and real estate taxes
Which of the following is true of buying a used car as compared to a new car? A used car will be in a better mechanical condition compared to a new car. A used car will depreciate at a lower rate compared to a new car. The accessories in a new car will be better updated compared to those fitted in a new car. Purchasing a used car will be less expensive as compared to purchasing a new car. The fuel efficiency in a used car is always higher compared to that of a new car.
Purchasing a used car will be less expensive as compared to purchasing a new car.
Phil and Christina are recently married and are unsure of where they will be relocated after Christina finishes her residency in 9 months. Based on this information, which of the following housing recommendations would be most appropriate for them? Renting a home Buying a condominium Buying a single-family dwelling Buying a cooperative apartment Purchasing a trailer
Renting a home
When shopping for a lease, you want: a high capitalized cost a low capitalized cost. a high money factor. a low residual value. high lease payments
a low capitalized cost.
The majority of each monthly payment at the beginning of the loan goes to pay the: principal. interest real estate taxes. homeowner's insurance. private mortgage insurance.
interest
