chapter 10 personal finance
points paid at closing represent
a fee paid to the lender
the term ARM stands for
adjustable rate mortgage
the size of the monthly payment on a mortgage is not dependent on the
brokers commission
the schedule that shows your monthly home payment and the amounts applied to principal and interest each month is called a depreciation table
false
fixed rate mortgage
fixed interest rate until maturity
in negotiating for the purchase of a home, which of the following is unlikely to be included in the negotiating process
cost of moving the buyers possessions into the home
adjustable rate mortgages are riskier than fixed rate mortgages. however, they may be useful when the interest rate is expected to ____ in the future
decrease
the first step in the home-buying process should be to
determine a realistic price range of home you can afford
for a conventional mortgage you will typically need a ____ of from 10% to 20% of the selling price of the home you are purchasing
down payment
which of the following would not be included in closing costs
earnest money
if you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a
escrow account
a pint is a flat fee of $500 for each multiple of $100,000 that you finance on a new home
false
caps on adjustable-rate mortgages refer only to the maximum fluctuation in interest rates
false
condominiums have the advantages of sharing expenses among owners and giving the owners more privacy than single-family homes
false
government-backed mortgages may require lower down payments than conventional mortgages, but usually charge higher interest rates
false
homes near areas that have just been zoned for industrial use become more valuable
false
if you think interest rates will rise in the near future, you should seek an adjustable rate mortgage
false
in addition to closing costs, real estate agent fees of more than 10% are charged when you buy a home
false
in comparing 15 and 30 year mortgage, over the life of the loan you will have smaller payments but pay more interest with the 15 year mortgage
false
most individuals pay for a home with a down payment of 5% or less and then obtain a mortgage to finance the rest
false
online real estate services are more convenient, but usually charge higher commissions than traditional full-service real estate companies
false
since most of the problems have already been fixed, older homes usually have lower maintenance expense than newer homes
false
since real estate brokers are licensed and bonded, they are required to give you unbiased information about real estate purchases
false
since there is no limit on how much and how fast adjustable rate mortgages (ARMs) can increase, most homeowners are afraid to take out this kind of loan
false
to simplify and speed up the home-buying process, you should first make a verbal offer to see if the seller is willing to take the price you are willing to offer
false
you should consider the school system near a home only if you are likely to have school-aged children
false
points
fees that are a percentage of the purchase price and are paid by the borrower to the lender to obtain a reduction in the interest rate
when homeowners expect that interest rates will rise, they prefer
fixed rate loans
if the interest rate on your home mortgage will not change over the life of the loan you have a
fixed rate mortgage
the type of home that probably would require the lowest maintenance is a
home built by a well-known construction company
when buying a home, which of the factors below should be considered in the decision process
homeowner association covenants
an amortization schedule shows all but the
increase in market value
over the life of a mortgage, the payment to principal ______ and the portion to interest expense ______
increases, decreases
which of the following is true of private mortgage insurance
it generally is required if the borrower makes a down payment of less than 20%
which of the following is true
loan application fees range from $100-$500
by shopping around, a homeowner can probably avoid which of the following fees
loan origination fee
which of the following is most important when selecting a home
location
when obtaining a mortgage you should
maintain some funds for liquidity purposes to cover unanticipated bills
which of the following is true about condominiums
maintenance fees of common areas are shared
to determine how much home you can afford to purchase, you should not consider
money you might receive if you win a small lottery
in negotiating a price for the purchase of a home, you should do all of the following except
offer the highest price you can afford first to get the purchase settled quickly
homeowners association fees are not
optional for homeowners in the area
on a fixed rate mortgage, the monthly
payment remains constant and interest rate stays the same
which of the following does not reflect the impact of a strong economy on home prices
people spend their money more conservatively
all of the following information, except _______, can be found on a variety of web sites about mortgages
projected rate increases
when purchasing a home, which of the following costs will you NOT incur
real estate agents commission
when selling a home, which of the following costs will you incur?
real estate agents commission
a _____ is responsible for determining the value of the home as part of the loan process
real estate appraiser
of the following fees involved in the purchases of a house, which is usually not borne by the purchaser
real estate brokers commission
making extra mortgage payments does which of the following
reduces the length of the loan
the initial rate on an ARM will typically be
relatively low, which benefits the homeowner
owning a home entails all of the following expenses EXCEPT
renters insurance
which of the following costs associated with home ownership is hardest to budget
repairs
amortization schedule
schedule of payments, interest expense, and balance
of the following criteria for selecting a home, which would probably be least important for buyers older than 55
school system
all of the following illustrate lessons learned regarding the 2008-2009 financial crisis except
sellers were able to attract potential buyers by slightly reducing sale prices
as a result of the financial crisis of 2008-2009, some financial institutions accepted a _____ arrangements in which the lender accepted the proceeds of the sale of a home as full payment on the debt owed even though the proceeds were less than the debt owed
short-sale
when a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a _____ mortgage
subprime
on disadvantage of a neighborhood with a homeowners association is that
the association convents how you decorate the outside of your home as well as what you store outside on the property
an advantage of using online real estate services is that
the commissions and fees are often less than those charged by traditional full-service real estate agents
when buying a home, all of the following are economic factors one should consider, except
the existing interior paint colors
fixed rate mortgages usually have
the same interest rate
all of the following are true of FHA loans, except
they are required for mortgages larger than $300,000
closing costs
title search and insurance, appraisal fee, and other costs
a good way to estimate the market value of a home is to multiple the number of square feet by the average price per square foot of similar homes in the area
true
a sales contract stipulates not only the price offered for a home, but also the repairs to be completed and the move in date requested by the buyer
true
buying a home may be the single biggest investment you will ever make, so the decision should be taken very seriously
true
for a conventional mortgage, a lender typically requires a down payment of 10 to 20% of the homes selling price
true
for a long-term home loan, such as 30 years, the amount of principal you pay on your loan during the first few years is quite small
true
homeowners association monthly dues generally include water, sewer, garbage, and maintenance or other amenities such as pool, clubhouse, and a tennis court
true
if a person chooses to purchase a more expensive home, he or she may have to cut expenses in other areas such as entertainment
true
in determining the amount of down payment and monthly mortgage payments you can afford, you should maintain some extra funds for liquidity purposes to cover unanticipated bills
true
most real estate agents agree that location is the most important influence on a homes future resale value
true
proximity to schools can increase home values, while increased distance from schools often lower homes values
true
purchasing a condominium is an alternative to purchasing a detached house but also requires careful consideration of selection criteria
true
real estate brokers usually offer good advice, but since they have a vested interest in you buying from them, you should also factor in your own judgement
true
the purchase of a home represents a potential liability if you need to move quickly and the home does not appreciate in value
true
the specific location of your home can influence the amount of property taxes and insurance you will pay
true
there are a number of different mortgage types to choose from in financing a house or condominium, such as fixed or variable loans for 15-30 years
true
when buying a home, the seller pays the real estate agents commission, so you pay no fee for the agents services except in the form of a higher purchase price
true
when choosing a home, a convenient location can save you considerable travel time and expenses
true
your monthly payments for a house are likely to be as high as rent when you factor in mortgage payments, property taxes, homeowners insurance, and home repairs
true
which of the following is not true
veterans administration mortgage are extended to most first-time homebuyers
most home purchases are made initially
with a 10 to 20% down payment and a mortgage
one point on an $80,000 loan for the purchases of a $110,000 home would equal
$800
on the purchase of a home, one "point" is equal to
1% of the amount being financed
before buying a house you should do the following
-have your real estate agent complete a market price analysis for comparable properties -have a certified home inspector complete an inspection of the home inside and out -check you budget to make sure the home including all associated costs is affordable
when considering "how much home" you can afford, you should consider all of the following EXCEPT
-principal and interest payment -annual homeowners insurance premium divided by 12 -homeowners association monthly fee *** should all be considered
annual property taxes for home are usually
1%-2% of the home value
during the financial crisis of 2008-2009, approximately ____ % of subprime mortgages had late payments of at least 30 days
25%
if you wish to keep your monthly payments as low and predictable as you can, you should use a
30 year fixed rate
during a period when interest rates are very low by historical standards and are expected to increase substantially over time, individuals should choose
a fixed rate mortgage
a market place analysis is not
a guarantee of the price you will receive when selling a home
a 15 year mortgage compared to a 30 year mortgage has all of the following except
a lower appraisal fee
a mortgage where the interest owed changes in response to movements in a specific market determined interest rate is called a
adjustable rate mortgage
the schedule that discloses the monthly payment that you will make, based on a specific mortgage amount, a fixed interest rate level, and maturity is called a
amortization table
which of the following is false about condominiums
an individual owner must mow the grass or make any repairs to the common areas when needed
which of the following should not be considered when selecting a condominium
availability of companies that perform maintenance and repair services in the area
your home value is likely to be higher with all of the following except
being in an area that has just been zoned for industrial use
when buying a home, all of the following are factors one should consider except
borrowing as much as the lender is willing to loan you since the mortgage interest is tax deductible and may result in a larger tax refund
