Personal Finance Exam 2
With low interest rates, savers have begun investing in _____ where higher yields can be found.
Stocks
Paying mortgage points to get a lower rate of interest makes more sense if you expect to live in a home for a ______ period of time
longer
The ______ the period of time you expect to live in a house, the more likely refinancing is a sound financial decision.
longer
If your lender charges 1.5 mortgage points on a house selling for $100,000, on which there is a $90,000 loan, the points will cost you ____.
1,350
Your bank does not levy a service charge on your checking account as long as a $1,000 minimum balance is maintained. Your bank _____ advertise as free checking.
Cannot
Interest rates will be lower on your ____ account.
Checking
The market price for a house is $125,000 and the homebuyer will borrow $100,000. 2 points will equal $2,500.
False
If lenders specify a loan to value ratio of 70%, then a buyer must make a down payment of 70% on the purchase of the home.
False (30%)
The stated interest rate on your account is 7.12% with interest paid semiannually. Your effective rate of interest will be ______ than 7.12%.
Greater
Historically, the primary purpose of savings and loan associations was to
channel savings into mortgages
You have a choice of a 25 year mortgage or a 30 year mortgage. Your monthly payments will be _____ with the 30 year loan.
less
A condominium buyer will make monthly mortgage payments as well as pay a fee for services and maintenance of common areas.
True
A lender will generally require private mortgage insurance (PMI) if the down payment is less than 20%.
True
First time home buyers can withdraw up to $10,000 from an IRA without penalty before age 59 1/2.
True
If your bank states that it compounds monthly, the effective interest rate (APY) will be greater than the nominal interest rate.
True
The total amount of interest you would have to pay would be less with a _____ year mortgage.
shorter