Chapter 7
Jim wants to make an offer to buy an older house. At this point, he should:
Set up a home inspection
A real estate agent can help screen potential buyers to determine whether they will qualify for a mortgage. (T/F)
True
A renter may have the right to sublet an apartment. (T/F)
True
An advantage of a buy-down is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan. (T/F)
True
Angela wanted to rent an apartment, so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement. (T/F)
True
Lenny the landlord has the right to take legal action against Tina the tenant for nonpayment of rent of destruction of property. (T/F)
True
A disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments. (T/F)
False
An approved mortgage application usually locks in an interest rate for 60 to 120 days. (T/F)
False
As interest rates increase, more people are able to afford the cost of an average-priced home. (T/F)
False
At the closing of a home purchase, the buyer and seller conduct a walk-through of the property. (T/F)
False
Each year about 50 percent of home sales are made by the home's owners. (T/F)
False
Home equity is the current market value less the assessed value. (T/F)
False
Home improvements will definitely increase the selling price of a house. (T/F)
False
If you pay an extra $100 per month on your mortgage, your total loan principal will decrease and your total interest will remain the same. (T/F)
False
Lease-to-purchase and rent-with-option allow homeowners to become renters. (T/F)
False
Merrill bough a house and applied for a loan through the VA (Veterans Administration). The VA will provide the mortgage money. (T/F)
False
Mortgage points are paid to the lender at the end of the mortgage. (T/F)
False
Private mortgage insurance is usually required if the down payment for a home is less than 30%. (T/F)
False
Rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenants' belongings. (T/F)
False
The Real Estate Settlement Procedures Act (RESPA) requires that loan applicants be given an estimate of the closing costs after the actual closing. (T/F)
False
The most common conventional mortgage is the 20-year ARM. (T/F)
False
The purpose of an escrow account is to pay the points at closing. (T/F)
False
When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there. (T/F)
False
When interest rates are high and the demand for homes is low, prices of homes will likely by higher. (T/F)
False
Your decision to rent of buy should be based solely on lifestyle factors. (T/F)
False
Marcus can afford a monthly 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
Which of the following is NOT a benefit of home ownership?
Costs of maintenance, repairs, and home improvements
Renter's insurance protects the tenant by covering damage or theft to clothing, furniture, and stereo equipment. (T/F)
True
With a down payment of at least 5 percent, lenders use 33 percent of monthly gross income as a guideline for PITI (principle, interest, taxes, and insurance). (T/F)
True