Chapter 3 - Concepts and Responsibilities of Home Ownership

Condominium facts:

-Ownership of a condo involves sharing walls with other parties, and sometimes ceilings and floors - KEY CONCEPT the ownership is of the interior air space. -The floors and the walls are not owned by the individual condominium

5 major factors that influence the choice of location

1. employment opportunities 2. cultural advantages 3. government structure 4. social services 5. transportation

Budget mortgage (has 4 parts) payment

1. principal 2. interest 3. taxes 4. insurance (additional escrow account)

Planned Unit Development (PUD)

A form of cluster zoning providing for both residential and commercial land uses within a zoned area.

Cooperative AKA Co-op

A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease.

Condominium

A form of ownership of real property recognized in all states that consists of individual ownership of some aspects and co-ownership in other aspects of the property.

Time-Share

A license or contractual or membership right of occupancy in a project which is not coupled with an estate in the real property.

Mobile Home

A structure transportable in one or more sections, designed and equipped to contain not more than two dwelling units to be used with or without a foundation systems.

If the replacement cost of an item with a 5 year life span is $100, and it is 4 years old, what is the actual cash value of the item...? A. $20 B. $50 C. $80 D. $100

A. $20

The profit realized from the sale of real estate or other investment is known as...? A. Capital Gains B. Debits C. Credits D. Deductibles

A. Capital Gains

Most homeowners policies do NOT cover which of the following...? A. Flood damage B. Smoke damage C. Fire damage D. All of the above

A. Flood damage

PITI -

An acronym denoting that a mortgage payment includes, principal, interest, taxes, and insurance.

Homeowners Policy -

An insurance policy protecting against a variety of hazards.

Mixed-use Property

Any urban, suburban or village development, or even a single building, that blends a combination of residential, commercial, cultural, institutional, or industrial uses, where those functions are physically and functionally integrated, and that provides pedestrian connections.

Requirements of HOA/Planned unit development

Automatic and non sever-able membership for each unit owner and provide for mandatory unit assessments

The replacement cost minus depreciation is referred to as...? A. Net cash value B. Actual cash value C. Gross cash value D. Effective cash value

B. Actual cash value

Tax benefits for homeowners are provided in part to...? A. Discourage home ownership B. Encourage home ownership C. Reduce the length of home ownership D. Decrease mortgage payments

B. Encourage home ownership

What is the most common homeowners policy found in Texas...? A. HOA B. HOB C. HOC D. HOD

B. HOB

A married couple is exempt from paying taxes on capital gains for up to how much in profit if they lived in their house for at least 2 of the last 5 years...? A. $100,000 B. $250,000 C. $500,000 D. $1,000,000

C. $500,000

What does an individual owner of a condominium own?

Coverings, paint, carpet, flooring, also has a % in common facilities hallways, elevators, % of shared items in which they all own.

What is typically covered in a homeowners policy...? A. Personal property within the house B. The house itself C. Liability D. All of the above

D. All of the above

Which of the following is a tax deduction a homeowner can take advantage of...? A. Mortgage interest payments B. Real estate taxes C. Loan origination fees D. All of the above

D.All of the above

Back end ratio

Payment on all debts that the borrower has. (car payments, student loans, etc.) Payments of debt in addition to mortgage should not exceed 32%-36% of gross monthly income

Home Owners Association (HOA)

Planned unit development

Replacement Costs -

The insured is covered and reimbursed for the actual cost of replacing the damaged property.

Capital Gain

The profit realized from the sale of real estate or other investment. Capital loss occurs when an investment property or another type of investment is sold at a loss

For tax purposes, real estate taxes can be deducted from personal income...? True False

True

Modular homes can typically be built quicker and at a lower cost as compare to homes constructed on-site...? True False

True

A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease is known as a...? Cooperative Condominium Townhouse PUD

cooperative

Clue Report (comprehensive, loss, underwriting, exchange)

effected by claims.

Front end ratio

make sure that the monthly cost of the home does not exceed 25%-28% of the gross income.

Who is responsible for selling newly constructed mobile homes...? Manufactured home dealerships Real estate brokers Real estate agents Mobile home owners

manufactured home dealerships

A cooperative owner owns ......................... in the cooperative? Shares of stock A deed Title All of the above

shares of stock

Homeowners coverage wont cover if:

the house is vacant