FIN 300: Ch. 7
____ is considered the most important factor when buying a home; you may prefer an urban, a suburban, or a rural setting
Location
Mortgage payments are set to allow ____ of the loan, meaning the balance owed is reduced with each payment
amortization
An important security measure to take when your selling your own home is show the home by ____ only and when ___ or more adults are at home
appointment; 2
The common areas of condominiums are not owned by the condo owner but by the condominium ____ that oversees the management and operations of the condos
association
When selling your home on your own, obtain information about the _____ of financing and financing requirements; this information will help potential buyers determine whether they can afford the property
availability
Disadvantages of *Renting*: -no tax ____ -____ regarding remodeling -___ regarding pets and other activities
benefits; limitations; restrictions
The most common sources for a down payment include all of the following EXCEPT: A. assistance from relatives B. checking account funds C. personal savings D. sale of investments
checking account funds
A home equity loan allows you to deduct the interest on ____ purchases on your federal income tax return; however, it creates the risk of ____ the home if required payments on both the first and second mortgages are not made
consumer; losing
The revolving credit plan of a home equity loan can keep you ____ in debt as you request new cash advances
continually
If your offer is rejected, a ____ from the owner indicates a willingness to negotiate a price
counteroffer
Every buying ____ is a statement about your lifestyle
decision
Renters cannot take tax ____ for mortgage interest and property taxes or benefit from the increased real estate value
deductions
Each ___ point is equal to 1% of the loan amount and should be viewed as a premium when you pay for obtaining a lower mortgage rate
discount
As part of the offer, the buyer must present ____ money, a portion of the purchase price deposited as evidence of good faith; at the closing of the home, this money is applied toward the down payment
earnest
Personal preferences are the ____ of a housing decision, but financial factors will likely modify the final choice
foundation
If you plan to sell your home in the next few years, the ____ mortgage rate with fewer discount points may be better
higher
During the *3rd* phase of applying for a mortgage, the mortgage is either approved or denied, with the decision based on your financial ___ and an ___ of the home you want to but
history; evaluation
The major factors that affect the affordability of your mortgage are your ____, other debts, the amount available for a ____ payment, the length of the loan, and ____ mortgage rates
income; down; current
Be aware of ____, which is restrictions on how the property in an area can be used
zoning laws
Among the most desirable improvements are energy ___ features, a remodeled ___, an additional or remodeled bathroom, added rooms and ___ space, a converted ___, a fireplace, and an outdoor deck or patio
efficient; kitchen; storage; basement
After building up 20% ____ in a home, a home buyer should contact the lender to cancel PMI
equity
Quality of landscaping, trees, and shrubs are part of the exterior ____ in a house
facilities
The rate cap limit prevents the ____ from having to pay an interest rate that is significantly higher than the one in the original agreement
borrower
During the term of your mortgage, you may want to ___ your home, that is, obtain a new mortgage on your current home at a *lower* interest rate
refinance
The Homeowners Protection Act requires that a PMI policy should be ____ automatically when a homeowners equity reaches 22% of the property value at the time the mortgage was executed
terminated
Changing property ____ in an area can affect your financial investment
values
A VA loan can be obtained ____ a down payment
without
An ___, an estimate of the current value of the property, can provide a good indication of the price you should set when determining selling price; having this performed is likely to cost between $200 and $300
appraisal
Disadvantages pf *Buying*: -financial ____ -higher living ____ than renting -limited mobility
commitment; expenses
An asking price is influenced by recent selling prices of ____ homes in your area, ___ in the housing market, and current mortgage rates
comparable; demand
During the *2nd* phase of applying for a mortgage, the lender obtains a ____ and verifies your application and financial status
credit report
Which of the following is NOT included among closing or settlement costs? One of these is incurred at the *beginning* of the process and NOT at the closing A. lenders origination fee B. termite inspection C. title insurance D. credit report
credit report
As a general rule, it may be wise to refinance when the interest rates on mortgages drop at least 1 percentage point below your ___ mortgage rate
current
Homeowners can request that PMI be removed once equity has grown to 22% of the ____ of a home A. outstanding loan B. interest charges C. current market value D. resale value
current market value
Factors such as the size and arrangement of rooms, layout of kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting the interior ____ of a home
design
The amount you spend on housing is affected by funds available for a ___ payment, your income, and your current living ____
down; expenses
Buying a house is the most ___ decision people will ever make
expensive
The *1st* phase of applying for a mortgage is to complete the mortgage application and meet with the ____ to present evidence of employment, income, ownership of assets, and amounts of existing ____
lender; debts
The monthly payment amount will be higher on a 15-year loan than on a 30-year loan, but the total amount repaid will be ____
less
Common down payment sources are personal ____, sales of ____ or other assets, and assistance from relatives
savings; investments
A ____mortgage, more commonly called a home equity loan, allows a homeowners to borrow on the paid-up value of the property
second
Every buying a decision is a statement about your ____, which is how you spend your time and money, and it materializes in the consumer purchases you make
lifestyle
Advantages of *Renting*: -easy to ___ -____ responsibilities for maintenance -minimal ____ commitment
movie; fewer; financial
A home that has been on the market for over a ____could mean an opportunity to offer a lower price; your offer will be in the form of a purchase agreement or ____, which is your legal offer to purchase the home
year; contract
A major financial benefit of home buying is that mortgage interest and real estate taxes are a ____ tax deduction, resulting in lower income taxes
federal
A ____ cap restricts the amount by which the interest rate can increase or decrease during the ARM (adjustable-rate mortgage) term
rate
Higher property values and increased tax rates mean higher ____ taxes
real estate
Many states require that your security deposit be returned within a ____ time
reasonable
As interest rates ____, fewer people are able to afford the cost of an average-priced home
rise
Private mortgage insurance (PMI) is usually required if the downpayment is less than ___; this protects the lender from financial loss due to default
20%
Traditional financial guidelines suggest that you should spend no more than ___ or ___ of your take-home pay on housing or your home should cost about 2.5 times your annual income
25 or 30%
_____ are individuals owned housing units in a building; ownership does NOT include common areas, such as hallways, outside grounds, and rec facilities
Condominiums
_____ housing is a form of housing in which the units in a building are owned by a nonprofit organization; the shareholders purchase stock to obtain the right to live in a unit in the building
Cooperative (Co-op)
____ are prepaid interest charged by the lender
Points
____ homes have components built in a factory and then assembled at the housing site
Pre-fabricated
____ of residence and a personalized living location are important motives of many home buyers
Stability
If money is deducted from a refunded security deposit, you have the right to an ____ list of repair costs
itemized
The advantages of owning a manufactured home include features such as a fully equipped ____ and fire place, they are also less ____ than other options
kitchen; expensive
When seeking a real estate agent, it is important to consider the agent's ____ of the community and their ____ to market your property
knowledge; willingness
A drawback of a 30-year conventional mortgage is you will pay a relatively ___ amount in interest expense over 30 years
large
The benefits of a FHA/VA fixed-rate mortgage include a ___ down payment and may be assumable with no prepayment ____
low; penalties
The mortgage company will usually conduct an appraisal, which is not a home inspection but an assessment of the ____ value of the property
market
One of the most important services that real estate agents provide is ___ your house on various websites
marketing
Condominium owners pay a ____ fee for maintenance, repairs, improvements, and insurance of the building and common areas
monthly
A ____ is a long-term loan on a specific piece of property such as a home or other real estate; payments on this are usually made over 10, 15, 20, 25, or 30 years
mortgage
The FHA and VA government agencies do not provide the ___ money but they help buyers obtain low-interest, low-down payment loans
mortgage
The amount of cash available for a down payment affects the size of the ____ required; if you can make a large down payment such as 20% or more, you will be able to obtain a mortgage fairly easy
mortgage
It is a good idea for a home buyers to go first to a mortgage company and ____, which is the first step when applying for a loan
pre-qualify
The effective ____of your home can result in a fast and financially favorable sale
presentation
Advantages of *Buying*: -____ of ownership -financial benefits -lifestyle ____
pride; flexibility
If you have a family, asses the school system; educators recommend that schools be evaluated based on ____ variety, achievement level of ___, percentage of students who go to college, dedication of faculty members, facilities, school ___, and involvement of parents
program; students; funding
Homeowners without children also benefit from strong schools, since the educational advantages of a community help maintain ____ values
property
Some of the factors to consider when determine a price for a home include the owners need to ____, the time the home has been on the ____, and the features and condition of the home
sell; market
The closing costs, also referred to as ____ costs, are the fees and charges paid when a real estate transaction is completed
settlement
While the residents do not own the units in a co-op, they have the legal right to occupy a unit for as long as they own ___ in the cooperative association; the ___ for the property belongs to the co-op
stock; title
A condominium is not the building ____, it is a legal form of home ownership
structure
To qualify for an ____-insured loan, a person must meet certain conditions related to the down payment and fees; most low and middle income people can qualify for this loan program
FHA
Government guaranteed financing programs include loans insured by the ___ and ___
FHA (federal housing authority); VA (veterans administration)
____ homes are assembled in a factory and then moved to the living site
Manufactured
____ home is not a completely accurate term since very few are moved from their original site
Mobile
_____ mortgages (also called *home equity conversion mortgages*) provide homeowners who are 62 or older with tax-free income in the form of a loan that is paid back (with interest) when the home is sold or the homeowner dies
Reverse
The ____-guaranteed loan program assists eligible armed services veterans with home purchases; these loans come from a financial institution or a mortgage company, with the risk reduced by government participation
VA
If you plan to live in your home a long time (over 5 years), the ___ mortgage is probably the best action
lower
The ____ the credit score, the *higher* the mortgage rate
lower
A disadvantage of home ownership is financial ____ because obtaining money for a down payment and securing mortgage financing may be problems
uncertainty
An evaluation by a trained home ___ can minimize future problems
inspector
Other factors to be considered when buying a house are current ____ rates, the potential ____ value of the property, and your ____ to make monthly payments
mortgage; future; ability
The mortgage loan for which you can qualify is ____ when interest rates are low than when they are high
larger
Use the services of a ____ or title company when selling your own home to assist you with the contract, the closing, and other legal matters
lawyer
Although the interest only mortgage has lower interest payments, it does not allow the borrower to build ___ unless the home increases in value, it also doesn't allow the borrower to ___ the amount that is owed
build; decrease
The ___ is a meeting of the buyer, seller, and lender of funds, or representatives of each party, to complete the transaction
closing
The ____ the credit score, the *lower* the mortgage rate
higher
The main services of a real estate agent include: 1. showing you homes to meet your _____ 2. presenting your offer to the seller based on a market _____ 3. _____ a settlement price 4. assisting you in obtaining financing 5. representing you at the closing
needs; analysis; negotiating
A ____ deposit, frequently required when you sign a lease, is usually one months rent and is held by the landlord to cover the cost of any damages that may be done to a rental unit
security
A ___ cap keeps the payments on an ARM (adjustable-rate mortgage) at a given level or limits the amount to which those payments can rise
payment
