Chapter 9

A home worth $300,000 with $180,000 still owed on the mortgage would have equity of:

$120,000

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

Private Mortgage Insurance is usually required if the down payment is less than _____ percent of the purchase price of the home.

20

Which of the following is an example of a conventional mortgage?

A fixed mortgage rate

Earnest money is used:

As evidence of good faith by a homebuyer.

Which of the following is a form of housing in which the units in a building are owned by a nonprofit organization?

Cooperative housing

Which of these is a potential financial benefit of home ownership?

Increases in property value

Which of the following is most commonly used as a base index for setting rates for adjustable rate mortgages?

London Interbank Offered Rate

Which of the following is not an advantage of renting?

More financial benefits than home ownership

Which of the following would increase the equity in a home at a faster rate?

Obtaining a 15-year mortgage instead of a 30-year mortgage

Paula has completed a mortgage application and provided evidence of employment, income, assets owned, 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

Which procedure is a security measure if you are selling your home without a real estate professional?

Showing your home only when two or more adults are at home

Which of the following serves as collateral for the mortgage?

The home you buy

Which of the following is an example of a closing cost?

Title insurance

A cooperative housing arrangement involves:

a nonprofit organization whose residents must own its stock.

Money that is usually deposited with the lending institution for the payment of property taxes and homeowner's insurance is called:

an escrow account

A contract condition that states that the agreement is binding only if a certain event occurs is a:

contingency clause

Refinancing of a mortgage is recommended when:

interest rates fall

A lease is a legal document that provides the right to take legal action by the ____ for nonpayment of rent.

landlord

If you sell your home without a real estate agent, you should still employ the services of a _____ to assist you with the contract and the closing.

lawyer

The purpose of zoning laws is to:

restrict property use

A cost associated with renting would be:

security deposit

As you determine how much of a home you can afford, consider the price of the house along with the quality and:

size of the home

Noelle and Larry have decided to perform the landscaping of their new home by themselves. They also plan to take a do-it-yourself class at a local home store so they can replace the tile in the master bathroom without using a contractor. The effect of performing these tasks themselves will result in an increase in their:

sweat equity

A common cost associated with renting is:

the security deposit