Chapter 7 Smartbook

which of the following are the common terms (years) of home mortgages

- 10 - 15 - 20 - 30

in the context of the home inspection as part of the home-buying process, identify elements of exterior facilities

- appropriate drainage system - condition of patio or porch

what are some of the disadvantages of home ownership

- higher living expenses than renting - significant financial commitment - limited mobility when compared to renting

the expenses covered by a condominium monthly fee include

- insurance for common areas - improvements - maintenance and repairs

place the steps of the mortgage process in the sequence in which they occur

1. complete the mortgage application and present evidence of income, etc. 2. lender gets credit report, confirms financial aspects 3. mortgage is approved or denied

private mortgage insurance (PMI) is required when the down payment is less than ___ of the purchase price of the home

20 percent

payments on a mortgage are usually made over a time period ranging from 10 to ___ years

30

which of the following statements is NOT true

a point equals 5 percent of the loan amount

an estimate of the current value of the property is known as

an appraisal

the most common sources for a down payment include all of the following except

checking account funds

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

credit report

homeowners can request that PMI be removed once equity has grown to 22 percent of the ___ of a home

current market value

conventional 15- or 20-year mortgages have faster ___ buildup, which is a key advantage over a 30-year mortgage

equity

factors such as the material quality and condition of the building, the condition of the foundation, roof and gutters, and the type of chimney are part of the

exterior construction

factors such as the appearance of the neighborhood, the quality of landscaping, the condition of the driveway, and the outdoor lighting are part of the

exterior facilities

quality of landscaping, trees, and shrubs are part of the

exterior facilities of a house

a condominium is a type of building structure and not a legal form of ownership

false

home equity loan interest is only tax deductible as long as the proceeds are spent on education with the risk being that a default on the equity loan could mean foreclosure

false

monthly payments are typically the same across 15-, 20-, and 30-year loans

false

the one drawback of a conventional 15-year or 20-year mortgage when compared to a 30-year mortgage is

higher monthly payments

the act that requires that PMI (private mortgage insurance) be removed automatically once equity in the home reaches 22 percent is known as the

homeowners protection act

conventional 30-year mortgages provide certainty regarding principal and ___ payments

interest

how could the tax benefit and risk of a home equity loan best be described

interest is tax deductible, but default could mean foreclosure

factors such as the size and arrangement of rooms, the layout of the kitchen, and the location of bedrooms, closets, and storage space should be considered when inspecting the ___ of a home

interior design

you can sell your home on you own but you must be prepared to

invest your time and effort

your ___, needs, desires, and attitudes are reflected in your choice of a home

lifestyle

the most important factor when buying a home is said to be the home's ___

location

FHA/VA fixed-rate mortgage typically have ___ (low/high) down payment requirements

low

the benefits of an adjustable rate mortgage include which of the following

lower initial rates than fixed-rate loans

one of the most important services that real restate agents provide is that they

market your house on various websites

early in a person's career, renting is advantageous because renting offers

mobility

a ___ deposit is usually one month's rent that is held by the landlord to cover the cost of any damages to the rented property

security

during which step of the mortgage loan application process does the lender obtain a credit report and verify your application and financial status

step 2

educators recommend that schools be evaluated based on which of the following

students achievement level

which of the following captures the main factor to consider when refinancing a loan at a lower rate

the cost of refinancing versus the benefits (savings) of lower monthly payments

which of the following is NOT true

the initial rate offered by ARMS is usually higher than conventional mortgages

a security deposit covers the cost of damages that may be done at a rental unit

true

a security deposit covers the cost of damages that may be done to a rental unit

true

buying a house is the most expensive decision that most people will ever make

true

even if you do not use a real estate agent to sell your home, you should use an attorney or title company to close the transaction

true

every buying decision is a statement about your lifestyle

true

two external (market) factors that affect the price of a home are the current demand for housing and the financing options (i.e., interest rates) available

true

you should consider refinancing costs in relation to the savings gained with a lower monthly payment before moving forward with refinancing

true

a drawback of 30-year conventional mortgages is

you will pay higher initial rates than with adjustable mortgages

an adjustable-rate mortgage usually has a rate cap and a ___ cap

payment

___ mortgage insurance is usually required if the down payment is less than 20 percent

private

making needed repairs, painting the interior and exterior of the home, and cleaning all rooms are strategies that can lead to a fast and financially favorable sale

true

points are prepaid interest charged by the lender and one point is equal to 1 percent of the loan amount

true

some of the factors to consider when determining a price for a home include the owner's need to sell, the time the home has been on the market, and the features and condition of the home

true

the importance of preparing your home for sale is that it can make for a fast and financially favorable sale

true

the services that a real estate agent can provide include suggesting a selling price, making potential buyers and other agents aware of your home, and conducting showings of your home

true

the main benefit of a conventional 30-year mortgage is

fixed payment

buying a ___ is the most expensive decision that most people will ever make

home

location is considered the most important factor when buying a home

true

the benefits of a conventional 15-year or 20-year mortgage usually include

- a faster equity build-up than a 30-year mortgage - a quicker pay-off the loan than a 30-year amortization - a lower rate than a 30-year mortgage

in the context of the home inspection as part of the home-buying process, identify elements of interior design

- accessibility to basement and attic - adequate laundry area - ventilation for cooking

when purchasing a home, the buyer (not the seller) can expect to pay closing costs such as

- appraisal fee - title search fee - settlement fee

the benefits of a FHA/VA fixed-rate mortgage include

- low down payment - may be assumable with no prepayment penalties

generally speaking, the ___ the credit score the ___ the mortgage rate

- lower, higher - higher, lower

the advantages of owning a home include

- tax benefits - stability of residence - personalized living location

the benefits of an adjustable rate mortgage include all of the following except

fixed rates on loans

despite its fixed payments, some borrowers will select an adjustable rate mortgage over a conventional mortgage because

the adjustable rate mortgage has lower initial payments

common sources of down payment funds to purchase a home include

- personal savings - assistance from relatives - the sale of investments

factors that impact the asking price for a home include recent selling prices of comparable homes in your area

true

which of the following are the advantages associated with renting an apartment

- minimal financial commitment - less maintenance than owning - easy to move (mobility)

which of the following are the important considerations when evaluating a local school system

- program quality - percentage of students who go to college - achievement level of students

which of the following can affect mortgage affordability

- the length of the loan - your down payment - the amount of income you earn - mortgage rates