Other Costs of Buying a Home

To close on a home purchase you only need to pay the down payment and realtor fees.

F

When buying a home, the lender may hold money in an escrow account to pay _____.

c. property taxes

A lender estimates the closing costs on a home loan will be 3% of the loan amount of $180,000. The actual closing costs are listed below.

a. The lender made an excellent estimate; it was equal to the actual closing costs.

A lender estimates the closing costs on a home loan will be 3% of the loan amount of $180,000. The actual closing costs are listed below. Evaluate the lender's good faith estimate.

a. The lender made an excellent estimate; it was equal to the actual closing costs.

Mr. and Mrs. Zeller close on a 20 year home loan for $150,000. The monthly payment with no points is $1,160, but if they buy a point it is $1,150. What might you infer if Mr.and Mrs. Zeller choose not to buy a point?

a. They plan to sell the house at the end of 5 years.

Which of the following refers to the cost associated with getting a statement of the property value when buying a home?

a. appraisal

Fees paid at the time of a home loan transaction between the buyer, seller and lender are called _____. a. application costs b. closing costs c. lending costs d. purchase costs

b

The following closing costs were paid on a home loan. If the closing costs were 5% of the loan amount, how much was the loan amount?

b. $70,880

Yolanda closed on a 20 year home loan for $83,000. She chooses to buy only 1 point at closing. By buying a point at her closing, Yolanda reduced her monthly payment by $7.63. Based on the fact that Yolanda chose to buy a point at closing, what would you infer is the minimum amount of time that she will own the home?

b. 11 years

In what range do the closing costs on a home loan typically fall?

b. 3% to 5%

Without buying points, a monthly mortgage payment will be $1,250. Buying 1 point at closing would reduce the payment to $1,236. To the nearest year, how long would it take to break even by buying 1 point, with a $100,000 mortgage?

b. 6 years

What is the benefit of paying discount points as part of the closing costs?

b. Typically points lower the interest rate on the mortgage. The more points that a buyer pays up front, the lower the interest rate.

A lender estimates that the closing costs on a $312,500 home loan will be $12,500. The actual closing costs were 4.25% of the loan amount. Determine if the closing costs were higher or lower than the estimate and by what percent.

b. higher by 0.25%

Without buying points, a monthly mortgage payment will be $958. Buying 1 point at closing would reduce the payment to $948.75. If each point is costs $1000.00, rounded to the nearest year, how long would it take to break even by buying 1 point?

c. 9 years

Which of the following is not true about a loan discount point?

c. A point reduces the interest rate by 1%.

Money held by the lender to pay homeowners insurance and property taxes is put in a fund called _____.

c. escrow

A lender estimates that the closing costs on a $165,000 home loan will be $6,187.50. The actual closing costs were 3.5% of the loan amount. Determine if the closing costs were higher or lower than the estimate and by what percent?

c. lower by 0.25%

In addition to the following closing costs listed below, the buyer pays a realtor commission that is 3.5% of the loan amount. Closing Cost Charge Loan origination $280 Title insurance $476 Attorney's fees $675 Inspection $200 Recording fees $118 Escrow $573 If the loan amount is $165,000, how much was paid at closing? a. $2,322 b. $2,899 c. $5,775 d. $8,097

d

Why are closing costs a one time fee?

d. The closing costs cover titles, taxes, and realtor costs. After closing, the only monetary obligation is to the lending party.

A lender estimates the closing costs on a home loan will be 3.75% of the loan amount of $120,000. The actual closing costs are listed below.

d. The lender made a poor estimate; it was off by more than 0.5% of the actual closing costs.

In which of the following cases would you most likely buy a point when closing on a home loan?

d. The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

A lender estimates that the closing costs on a $293,600 home loan will be $11,010. The actual closing costs were 3.25% of the loan amount. Determine if the closing costs were higher or lower than the estimate and by what percent?

d. lower by 0.5%