Personal Finance: MS 30-34

If the tax rate on homes in Topeka, Kansas is 2.4 percent of their value and Bonnie owns a $100,000 house, how much will the real estate taxes add to her monthly mortgage payment?

$200

The Brown family just bought a home for $300,000. Of that amount, the land is valued at $50,000. How much would the Browns have to carry in fire insurance in order to collect the full amount from a fire that caused $50,000 in damages?

$200,000

If Joey purchased a $100,000 house with a 20 percent down payment and borrowed the rest on a 30-year mortgage at 4% interest, what would his monthly payment be?

$381.60

Paul's mom, Gina, owns her home outright, without a mortgage. It is currently worth $100,000. If she could get five percent interest by investing her money in a secure government bond, what is the implicit annual interest cost of her home?

$5,000

Donna is thinking about buying a house that costs $100,000. If she puts down $20,000 and is able to get a 5 percent mortgage, she wants an estimate of her total monthly housing expenses. As we just learned, the average annual cost for owning a house is 4.09 percent of the value of the house. If we do not include the opportunity cost of the down payment, amortization on the loan or any tax benefits from home ownership, what will be her monthly cost the first month?

$674.17

Colinda has just purchased her first home for $125,000. She put down a 20 percent down payment of $25,000 and took out a 6 percent mortgage for the rest. Her mortgage payment is $599.55 per month. How much of her first monthly mortgage payment is amortization?

$99.55

In the U.S. a standard mortgage requires a down payment of ____

20%

Leslie, a graduate student who rents an apartment, just turned 25 and is shopping for basic insurance coverage that she can get on her car. Which of the following is likely to provide her with the least expensive coverage?

A direct writer who posts its lowest rate for basic coverage online.

Paul has a car that is 8 years old and has 126,000 miles on it. Even though he couldn't get more than $2,000 if he sold it, he still pays $350 per year for collision insurance to pay him up to the value of his car if it were damaged. If Paul decides to drop his collision insurance coverage, how is he handling that risk

Assuming it

Brian owns a house with payments are fixed at $600 per month. Cheryl rents an apartment for $600 per month and her rent increases each year with the overall rate of inflation. If inflation over the next year is 5 percent, what will each of them pay per month in a year's time?

Brian will pay $600 and Cheryl will pay $630.

Which of the following types of housing allows owners to own their individual units but have everything outside the unit jointly owned?

Condominium

Margaret is 25 years old, single and working. She has just had a serious operation, which was paid for by her health insurance at work, but her doctors tell her that she won't be able to return to work for about 2 years. What type of insurance would keep income coming in during this period?

Disability Insurance

Joyce is an 18 year old high school senior with a car in her own name. Her folks, who are upper middle class, also have a car. Which car should have more liability insurance on it?

Her folks' car

Which of the following is true about homeowner's insurance?

If you have a mortgage, you are required to have it.

Jane and Fran work together and make the same amount of money. Jane owns her house, on which she has a mortgage, while Fran rents and neither is able to put away any savings after paying their bills and other monthly expenses. If they are both worth the same amount of money now and neither is able to put away any savings over the next five years, who is likely to be worth more money at that time?

Jane because part of the monthly mortgage payment she makes goes to pay off her loan, thereby increasing her equity.

Kevin owns a 2002 Ford Escort with a lot of miles on it that he needs to get to his job 10 miles away. The car is worth only about $1,000 but it costs him $200 per year to keep collision insurance on it with a $100 deductible. Kevin never has more than about $100 in the bank and has no one to fall back on in an emergency. Which of the following would be the best advice you could give to Kevin regarding his collision insurance?

Keep paying for collision insurance even though it is expensive.

Which of the following statements is true about home ownership?

More than 60 percent of American families own their home.

Which of the following is not an advantage of renting rather than owning a home?

Renters can walk away from their lease whenever they want while homeowners are stuck.

If we have an automobile policy with a $500 deductible on collision, that $500 is:

Self-insurance

Why is group insurance generally less expensive than policies sold by insurance agents?

Selling costs are lower.

Kathy has found a great apartment that costs $800 per month. To move in, her new landlord requires the first month's rent in advance plus a damage deposit equal to a month's rent. If she signs a year's lease and does no damage to the apartment, which of the following will be true.

She must pay $1,600 before moving in and gets back $800 when she moves out.

The Reich family is upper middle class with a nice house and nice cars. Both of the parents are professional people who earn far more than the average person in their state. When their daughter Christine turned 16 and got her driver's license, the Reichs put her on their auto policy and allowed her to drive a family car which had maximum liability insurance of $200,000. One night, Christine went to a party, got drunk, and hit a tree on her way back, killing two of her friends and badly injuring a third. Which of the following is most likely to happen?

The families of Christine's friends will sue the Reich family for an amount far larger than the $200,000 maximum insurance company limit.

What is the advantage of a fixed rate mortgage over a variable rate mortgage?

The interest on a fixed rate mortgage can't rise.

If you itemize your deductions on your Federal income taxes, which of the following home ownership expenses can you deduct from your income in calculating your tax?

The interest on your mortgage and all or part of your real estate taxes.

How do housing expenses compare with food expenses for American families?

They tend to spend nearly three times as much on housing as on food.

If you are a student with no assets of any value and have liability insurance on an old car that pays a maximum of $50,000 per accident, what is most likely to happen if you cause an accident that results in $75,000 in damage to the passengers in another car?

They will accept the $50,000 maximum offered by your insurance company

Jen and Walter are a young, married couple with a 5-year-old son. They are looking for a house, with a yard, in a nice neighborhood in a good school district where they can plan to live until their child is grown. Which of the following is an advantage of renting a home rather than buying it?

They won't have to put down a large down payment.

Which of the following is true of a condominium?

You must pay a monthly condominium fee in addition to your mortgage cost and cost of utilities.

Why is it generally a bad idea to put a lot of money into improvements for a home you are renting?

You will lose your investment in those improvements when you move out

Which of the following groups of people is most likely to move in any given year?

Young single people 25-34.