Chapter 8 & 9 - Key terms, Review Quiz, Quiz, etc.
Isabel would spend $200 per week on groceries for her family if she did not use coupons. Her coupons save her 10 percent of that amount. She puts the amount saved into her savings account. How much will she have in her savings account at the end of the first year? Ignore interest earnings.
$1,040
Ted pays $4,500 in real estate property taxes and is in the 28 percent tax bracket. What is the value of this federal tax deduction?
$1,260.
A credit purchase with 24 monthly payments of $78 and a down payment of $120 would have a total cost of:
$1,992
John Gleason has a 30-year mortgage with monthly payments of $790.09 at an interest rate of 6.5%. The amount of the loan is $125,000. How much of John's first payment is principal?
$113.01
Duane Miller wants to know what price home he can afford. His annual gross income is $60,000. He has no other debt expenses and expects property taxes and insurance to cost $400 per month. He knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. He expects to make a 10% down payment. What is Duane's affordable home purchase price? Round your answer to the nearest $100.
$164,800
A motor vehicle has annual depreciation of $2,000; oil changes cost $120, automobile insurance $500 annually, and license plates costs $100. What is the annual amount of the total fixed operating cost for this vehicle?
$2,600
A renter is required to pay a security deposit of $800, on which 4 percent interest will be paid. What amount would the person earn each year?
$32
Federal laws limit the amount of fraudulent charges that a consumer is liable for in the case of a lost or stolen card to:
$50
Michelle Duncan wants to know what price home she can afford. Her annual gross income is $45,000. She owes $750 per month on other debts and expects her property taxes and homeowners insurance to cost $250 per month. She knows she can get a 7.5%, 30 year mortgage so her mortgage payment factor is 6.99. She expects to make a 20% down payment. What is Michelle's affordable home purchase price? Round your answer to the nearest $100.
$76,000
Joe Johnson earns $2750 in gross salary per month. He has now debt but has estimated that his monthly payments for taxes and homeowner's insurance on a home would be $170. He wants to get a 15-year mortgage at 8.5% and wants to put down 20% in cash. What is the maximum priced home he can afford? (Refer to the mortgage payment factor table in the textbook.)
$76,142
The Homeowners Protection Act requires that a PMI policy be terminated automatically when a homeowner's equity reaches _____ percent of the property value at the time the mortgage was executed.
22
Which of the following is an example of a conventional mortgage?
A fixed-rate mortgage
Which of the following would give you an estimate of the fair market value of the home?
Appraisal
Paul Spoon has noticed that interest rates have risen in recent months. He is worried that this may make it more difficult for him to finance the purchase of a car. This would be an example of a(n) ________ factor that influences his purchasing decision.
Economic
Which type of government agencies publish materials to assist consumers with buying decisions and financial planning?
Federal, Local AND State
Kate plans to rent instead of buying her housing. Which advantage of renting will she realize?
Lower initial costs
____________ is considered a variable operating expense of an automobile.
Maintenance
Which one of these situations creates negative amortization?
Paying less than the monthly interest on a mortgage
A scam that involves malicious software or an e-mail attachment that plants a virus or worm in the user's computer or in a server that directs traffic on the Internet is called:
Pharming
What is prepaid interest charged by a mortgage company called?
Points
Carrie Howell has purchased a Toyota Camry. After she has driven it 5000 miles she takes it back to the dealer for its regular maintenance and service. She is careful to save all her receipts so she can be sure future repairs will be covered by her warrantee. Which phase of the consumer purchasing decision is she doing?
Post-purchase activities
Jennifer Garland is purchasing a home that was assembled in a factory and then moved to the living site. What type of house is Jennifer purchasing?
Prefabricated home
Paula has completed a mortgage application and provided evidence of employment, income, and existing debt to the potential lending institution. Although Paula has not even begun the process of looking at possible homes to buy, she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage. In what stage of the application process is she?
Prequalification
The average used car costs about $10,000 less than the average new car. T or F?
True
The first step in resolving a consumer complaint is to return to the place of purchase. T or F?
True
Which of the following would likely be an advantage of buying a car from a private party?
You are likely to find a car at a lower price
second mortgage
a cash advance based on the paid-up value of a home; also called a home equity loan
Ownership of an individual housing unit in a building is commonly called:
a condominium
small claims court
a court that settles legal differences involving amounts below a set limit and employs a process in which the litigants usually do not use a lawyer
deed
a document that transfers ownership of property of one party of another
A new store has opened on the edge of town. It offers Bass, Easy Spirit, Nike and other shoes at low prices. Some of the shoes are slightly irregular and there are no returns once shoes have been purchased. This is most likely an example of:
a factory outlet store
conventional mortgage
a fixed-rate, fixed-payment home loan with equal payments over 10, 15, 20, 25, or 30 years.
cooperative housing
a form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units
adjusted-rate mortgage
a home loan with an interest rate that can change during the mortgage term due to changes in market interest rates; also called a flexible-rate mortgage or a variable rate mortgage
manufactured home
a housing unit that is fully or partially assembled in a factory before being moved to the living site
class-action suit
a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice
lease
a legal document that defines the conditions of a rental agreement
rate cap
a limit on the increases and decreases in the interest rate charged on an adjustable-rate mortgage
payment cao
a limit on the payment increases for an adjustable-rate mortgage
reverse mortgage
a loan based on the equity in a home, that provides elderly homeowners with tax-free income and is paid back with interest when the home is sold or the homeowner dies
mortgage
a long-term loan on a specific piece of property such as a home or other real estate
cooperative
a nonprofit organization whose member-owners may save money on certain products or services
rebate
a partial refund of the price of a product
earnest money
a portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer
A cash advance based on the paid-up value in a home is known as:
a second mortgage
Steve Black goes to Barney's Bargain Car Barn to buy a used car. What type of used car seller is he likely dealing with?
a used car dealer
warranty
a written guarantee from the manufacturer or distributor of a product that specifies the conditions under which the product can be returned, replaced, or repaired
service contract
an agreement between a business and a consumer to cover the repair costs of a product
appraisal
an estimate of the current value of a property
Which home improvement is least likely to increase the value of your home?
an exercise room
condominium
an individually owned housing unit in a building with several such units
buy-down
an interest rate subsidy from a home builder or a real estate developer purchased by the buyer that reduces a home buyer's mortgage payment during the first few years of the loan
Private label products are those that:
are sold by one chain of stores
Earnest money is used:
as evidence of good faith by a homebuyer
Mike Jacobs is planning to lease an automobile. In an effort to minimize the price of the vehicle being leased, Mike should compare the ____________ at different leasing companies.
capitalized cost
The _____________ is price of a vehicle in a lease agreement.
capitalized cost
A(n) ____________ is an individually owned unit in a building with several such units.
condiminium
____________ are non-profit stores created by people in a neighborhood to serve their customers, who are also called members. Prices at this type of store are usually lower than at other retailers.
cooperatives
The purpose of the invoice price is to inform customers of the:
dealer's cost
The main purpose of Consumers Union is to:
evaluate the quality of products and services
There is no ability to negotiate on the price of a home you are interested in purchasing. True or False?
false
closing costs
fees and charges paid when a real estate transaction is completed; also called settlement costs
Cooperatives are most commonly organized to sell:
food
Open dating provides information on:
freshness
open dating
information about freshness of shelf life found on the package of a perishable product
title insurance
insurance that, during the mortgage term, protects the owner and lender against financial loss resulting from future defects in the title and form unforeseen property claims not excluded by the policy
Refinancing of a mortgage is recommended when:
interest rates fall
Stacia Wert-Gray is reading the labels on new cars. She discovers that one car gets 31 MPG on the highway while the other car she is looking at gets 23 MPG on the highway. Which buying strategy is Stacia pursuing?
label information
If you sell your home without a real estate agent, you should still employ the services of a(n):
lawyer
What type of warranty covers only certain aspects of the product, such as parts, or requires the buyer to incur part of the costs for shipping or repairs?
limited warranty
Nancy McClure has had a new roof put on her house. She is very unhappy with the work that has been done. She decides to take the roofing company to court because she has been unable to resolve the problem in any other manner. Nancy is using which step for resolving consumer problems?
litigation
The most commonly considered factor when selecting a home is the:
location of the home
Renting is more advantageous than buying a home when you are seeking:
lower short-term living costs.
escrow account
money, usually deposited with the lending financial institution, for then payment of property taxes and homeowner's insurance
A(n) ____________ is a long term loan on a specific piece of property.
mortgage
legal aid society
one of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney
A condominium involves:
ownership of an individual living unit
The purpose of a security deposit is to:
pay for potential damages.
Damian Walker just purchased a new vehicle. He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer. He wants to make sure this car lasts a while. What step in the purchasing process is Damian carrying out?
post purchase activities
points
prepaid interest charged by a lending institution for the mortgage; each discount point is equal to 1 percent of the loan amount
The main purpose of the Edmund's Guide is to:
provide price data
The purpose of small claims court is to:
resolve minor consumer complaints
The purpose of a rate cap with an adjustable rate mortgage is to:
restrict the amount by which the interest rate can increase
zoning laws
restrictions on how the property in an area can be used
Most consumer complaints are resolved by:
returning to the place of purchase
A home equity loan may also be referred to as a _________ mortgage/
second
A cost associated with renting would be:
security deposit
What is the most popular type of home ownership?
single family dwelling
The Sears Kenmore dishwasher is an example of a:
store brand
Legislation that requires that loan applicants be given certain information, including an estimate of closing costs, before the closing is known as:
the Real Estate Settlement Procedures Act
mediation
the attempt by an impartial third party to resolve a difference between two parties through discussion and negotiation
One of the advantages of owning your own home is:
the growth in equity while you own the home
refinancing
the process of obtaining a new mortgage on a home to get a lower interest rate
amortization
the reduction of a loan balance through payments made over a period of time
The expected value of the car at the end of the lease is:
the residual value of the car
arbitration
the settlement of a difference by a third party whose decision is legally binding
unit pricing
the use of a standard unit of measurement to compare the prices of packages of different sizes
An adjustable rate mortgage often has a lower initial interest rate than a conventional mortgage. True or false?
true
Private mortgage insurance (PMI) is usually required if the down payment on the house is less than 20 percent. True or false?
true
impulse buying
unplanned buying
