Ch.7

Ricky has a conventional mortgage. He can monitor the reduction of his loan balance through his payments by using _____ information.

amortization

When Nancy buys her house, the mortgage company will usually conduct a(n)

appraisal

Madeline wants to purchase a larger house. However, she has not yet. She may want to include a ______ in her offer.

contingency clause

Which of the following is the document that transfers ownership of property from one party to another?

deed

Opal is a real estate agent who represents the buyer as well as the seller. In some states, the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as a(n)

dual agent

Which of the following is an account used to pay property taxes and homeowner's insurance?

escrow

If you do not pay back any of the loan amount for a portion of the loan period but are not defaulting in the loan, you have an

interest-only mortgage

The tenant is the

lessee

When Sam applied for a loan, he was assured that his rate would not change if he closed within 30 to 90 days. Sam had a(n) ______ on the interest rate.

lock

Yvette had a flexible-rate mortgage that limits the amount to which her monthly payments can rise. This feature is called a

payment cap

The opportunity to have aother person take over rent payments and live in the rental unit is called

subletting

Carrie bought a house five years ago for $150,000. At that time she borrowed $140,000 from her bank. The house is now worth $162,000.Her PMI will automatically be dropped when her mortgage balance drops to

$117,00 Per the Homeowners Protection Act, PMI must be terminated automatically when a home owner's equity reaches 22% of the property value at the time the mortgage was executed. The mortgage would then be $150,000 x (1-0.22)= $117,000

Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage (where the mortgage factor is 5.37), how much of a mortgage loan can he afford?

$167,597.77 Affordable mortgage amount = (affordable monthly mortgage payment/mortgage factor) x 1,000 ; thus ($900/5.37) x 1,000 = $167,597.77

Given the information here, what is the annual cost of owning? -Home value $300,000 -Annual mortgage payments $19,200 -Annual property taxes $4,800 -Annual homeowner's insurance $1,200 - Estimated maintenance and repair (1% of home value)= $3,000 - Growth in equity $3,000 - Tax savings (mortgage interest and property tax) $2,800 -Estimate annual appreciation 1.5% of home value

$17,900

If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward principal?

$625 Interest = Principal x interest rate x Time = $150,000 x 5% x 1 month/12 months = $625

Ingrid was selling her house. She contacted Gabe, her real estate agent, to help her with the sale. Gabe's services included

- Suggesting a selling price - Showing Ingrid's home to potential buyers - Screening potential buyers to determine whether they will qualify for a mortgage - Providing advice on features to highlight

Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the affordability mortgage calculation included all of the following

- The home purchase price he can afford - The mortgage amount he can afford - The monthly mortgage payment he can afford

Paul and Lora built their home. When they research contractors, they considered all of the following

-Payment arrangements during construction - Time and payment schedules - Contractor's reputation and experience - Contractor's relationship with suppliers and carpenters

What should a home buyer consider when evaluating a house?

-Property values of the community - Location of businesses and future construction projects - School system - Zoning laws

The following statements are correct

-Renting is usually less costly in the short run - Home ownership usually has long-term financial advantages - Renting offers mobility - Lifestyle and financial factors should be analyzed to determine if you should rent or buy

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

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

The following are correct regarding real estate agents

-They will make other agents aware of your home -They may screen potential buyers to determine if they will qualify for mortgage for your home - They can provide advice on features of your home to highlight -They can suggest a selling price

Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect?

An advantage is that the down payment required is less than the security deposit for a rental

Paul and Lora built their home. When they research contractors, they considered all of the following except

Contractor's property tax payments during construction

Which of the following is a form of housing in which the units are owned by nonprofit organization?

Cooperative housing

Frank and Diane want to buy a house. Which of the following do they need before they purchase a house?

Down Payment

Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the affordability mortgage calculation included all of the following except

Expected maintenance costs

Paul is looking for a low-interest, low-down payment loan for his first home, but he is not a veteran.. He might be eligible for a(n)

FHA loan

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

His original cost

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

A legal document that includes information about the due date of monthly rent is called a

Lease

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

Lease

The owner/landlord is known as the

Lessor

Diana purchased her house and had it assembled before it was moved to her lot. She purchased a

Manufactured home

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% down payment. He probably will be required to have

PMI payments

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

Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called

Points

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.

J wants to make an offer to buy an older house. At this point, he should

Set up a home inspection

Kelly selected a home and submitted an offer to the seller.

The seller may reject the offer and choose to provide a counteroffer

Which of the following is NOT correct regarding real estate agents?

They require that you conduct your own showings

Elaine purchased her living unit in a building with five other separate units. She purchased a

Townhouse

Which of the following is NOT correct?

Traditional financial guidelines suggest that your home should cost about five times your annual income.

As a result of being an armed services veteran. Dan should be eligible for a

VA loan

If you are selling your house by owner, you should still enlist the assistance of

a lawyer or title company to assist with the contract, closing, and other legal matters