Personal Finance Ch. 7
Georgina and Henry have a family and are looking at houses. Which of the following is correct?
They should assess the school system in the area they want to live
Which of the following is NOT correct?
Traditional financial guidelines suggest that your home should cost about five times your annual income.
When Nancy buys her house, the mortgage company will usually conduct a(n)
appraisal
Which of the following is a form of housing in which the owners pay a monthly fee for maintenance of the common areas?
condominium
Which of the following is a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building?
cooperative housing
Which of the following is a form of housing in which the units are owned by a nonprofit organization?
cooperative housing
Pauline just submitted an offer on her dream home. As evidence of good faith , she also included a(n)
earnest money
A landlord has the right to sublet an apartment.
false
The most common conventional mortgage is the 20-year ARM.
false
The purpose of an escrow account is to pay the points at closing.
false
When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there.
false
When interest rates are high and the demand for homes is low, prices of homes will likely be higher
false
This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property.
lease
this provides the tenant protection from rent increases
lease
the tenant is the
lessee
the owner/landlord is known as the
lessor
Which of the following expenses is NOT usually incurred by a tenant?
property taxes
The opportunity to have another person take over rent payments and live in the rental unit is called (a)
subletting
Elaine purchased her living unit in a building with five other separate units. She purchased a
townhouse
Renter's insurance protects the tenant by covering damage or theft to clothing, furniture, and stereo equipment.
true
Major factors that affect the affordability of your mortgage include all of the following except
size of the home
Frank and Diane want to buy a house. Which of the following do they need before they purchase a house?
down payment
With a downpayment of at least 5%, lenders use 33% of monthly gross income as a guideline for PITI (principal, interest, taxes, and insurance)
true
Your lifestyle affects your housing decision
true
Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage (where the mortgage factor is 5.37), how much of a mortgage loan can he afford?
150,000
Paul and Lora built their home. When they researched contractors, they considered all of the following except
Contractor's property tax payments during construction
Which of the following is NOT a benefit of home ownership?
Maintenance and costs of repairs and home improvements
Private mortgage insurance
Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed
Which of the following is an advantage of renting?
Renters have fewer responsibilities than home owners.
Which of the following is a disadvantage of renting?
Tenants cannot take tax deductions for mortgage interest and property taxes.
Most tenants sign a lease. Which of the following is part of a lease agreement?
The conditions under which the landlord may enter the apartment.
Kelly selected a home and submitted an offer to the seller.
The seller may reject the offer and choose to provide a counteroffer
Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect?
An advantage is that the down payment required is less than the security deposit for a rental
A condominium is a form of housing in which the units in a building are owned by a nonprofit organization.
false
A disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments.
false
An advantage of a second mortgage is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.
false
An advantage of renting is pride of ownership.
false
As interest rates increase, more people are able to afford the cost of an average-priced home.
false
At the closing of a home purchase, the buyer and seller conducts a walk-through of the property.
false
Each year about 50% of home sales are made by the home's owners.
false
Home improvements will definitely increase the selling price of a house.
false
If you pay an extra $100 per month on your mortgage, your total loan principal will decrease and your total interest will remain the same.
false
If your home is assessed for $200,000, the market value of the home should be less than $200,000.
false
Lease-to-purchase and rent-with-option allow homeowners to become renters.
false
Merrill bought a house and applied for a loan through the VA (Veterans Administration). The VA will provide the mortgage money
false
Mortgage points are paid to the lender at the end of the mortgage.
false
Rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenants' belongings.
false
The Real Estate Settlement Procedures Act (RESPA) requires that loan applicants be given an estimate of the closing costs after the actual closing.
false
A real estate agent can help screen potential buyers to determine whether they will qualify for a mortgage..
true
An advantage of a buy-down is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.
true