Skillquest Chapter 5
If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 80 percent, then the borrower must make a down payment of at least _____ a. $100,000. b. $20,000. c. $80,000. d. $180,000. e. $120,000.
b
A foreclosure happens when: a. the lenders attempt to recover loan balances from insolvent borrowers by forcing the sale of the home pledged as collateral b. the borrowers repay their housing loan well before the estimated closing period of the loan. c. the value of a house is higher than the loan taken on the property. d. the rates of interest prevalent in the housing market are extremely volatile, forcing the lender to demand additional collateral from the borrower. e. the yield on a treasury bill is reduced significantly by the central bank.
a
A lender will usually require a loan-to-value ratio of _____ or less for you to avoid having to pay private mortgage insurance (PMI). a. 80% b. 95% c. 90% d. 75% e. 85%
a
As home prices have fallen in recent years, the rent ratio: a. and rent affordability have decreased. b. has increased and rent affordability has decreased c. and rent affordability have increased. d. has decreased and rent affordability has increased. e. has increased and rent affordability has stabilized.
a
At the end of your car lease period, you intend to turn in the car, and you will not pay extra at that time based on the residual value of the car. You have _____ lease. a. a closed-end b. an open-end c. a residual d. a money factor e. a purchase option
a
For most homeowners, the most important financial benefit from owning a home is that it is: a. a tax shelter. b. a cash flow item. c. a security for loans. d. a psychic income. e. an inflation hedge
a
Fredrick purchased a property worth $150,000 on mortgage. He had paid $30,000 as a down payment on this property. However, due to a recent slump in the real estate prices, the property was worth only $110,000, forcing Fredrick to sell the property. This sale is termed a (an) _____. a. real estate short sale b. shrinking principal c. indexed equity d. fixed interest expense e. real estate declining equity
a
If the maximum loan-to-value ratio that a lender will accept on a $100,000 loan is 90%, then the borrower must make: a. a minimum down payment of $10,000 plus closing costs. b. a minimum down payment of $90,000 including closing costs. c. closing costs plus points of $10,000. d. a maximum down payment of $10,000.
a
Phil and Christina are recently married and are unsure of where they will be relocated after Christina finishes her residency in 9 months. Based on this information, which of the following housing recommendations would be most appropriate for them? a. Renting a home b. Buying a cooperative apartment c. Buying a condominium d. Buying a single-family dwelling e. Purchasing a trailer
a
The Federal Housing Administration _____ high loan-to-value ratio mortgages. a. insures b. guarantees c. grants d. allows e. subsidizes
a
The _____ governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer. a. Real Estate Settlement Procedures Act b. Truth-in-Lending Act c. Equal Credit Opportunity Act d. Real Estate Agents Act e. Mortgage Lenders Act
a
When you receive title to an individual unit and joint ownership of any common areas and facilities, you have purchased a: a. condominium b. cooperative c. row house. d. mobile home. e. single family home
a
a situation where homeowners owe more to lenders than what their properties are worth. a. A negative equity b. An adverse rent ratio c. A foreclosure d. A real estate short sale e. Inflation
a
The data in a multiple listing service (MLS):a. eliminates the need for a real estate agent. b. consists of a comprehensive listing of properties for sale in a given geographic area. c. deals only with undervalued properties within a geographic location. d. is accessible by the buyers and sellers directly. e. includes the entire ownership history of the listed properties.
b
Which of the following are tax deductible if one itemizes deductions? a. Principal and interest b. Interest, insurance, and real estate taxes c. Principal, interest, real estate taxes, and insurance d. Principal, interest, and real estate taxes
b
An escrow account is used to collect _____ from one's monthly mortgage payment. a. principal b. real estate taxes c. interest d. closing costs e. operating expenses
b
Which of the following is true of buying a used car as compared to a new car? a. The accessories in a new car will be better updated compared to those fitted in a new car. b. Purchasing a used car will be less expensive as compared to purchasing a new car. c. The fuel efficiency in a used car is always higher compared to that of a new car. d. A used car will be in a better mechanical condition compared to a new car. e. A used car will depreciate at a lower rate compared to a new car.
b
Variable auto ownership costs are most dependent on: a. the down payment. b. the miles driven. c. periodic renewals of vehicle registration. d. the city lived in. e. driver behavior
b
Fees charged by lenders as a condition of a mortgage loan that effectively raises the interest rate are called: a. loan fees b. add-on charges c. mortgage points. d. down payments. e. commissions.
c
If the interest rates and monthly mortgage payments will not change over the life of your mortgage, you have _____. a. a reverse-annuity mortgage b. a graduated-payment mortgage c. a fixed-rate mortgage d. an adjustable rate mortgage e. a rollover mortgage
c
Jacob has taken an SUV on lease from Free Cruisers Inc. for a period of four years. Jacob does not need to pay any extra amount, based on the residual value of the car, at the end of the fourth year. He has a _____. a. reassignment option lease b. residual lease c. closed-end lease d. right to early termination lease e. purchase option lease
c
Which of the following is a fixed auto ownership cost? a. The cost of tires b. The cost of oil c. The cost of automobile insurance d. Maintenance and repair costs e. The cost of fuel
c
A real estate sales contract will include: a. the current value of the cost of repairs on the house. b. deed restrictions. c. the terms of a mortgage loan taken from a third party. d. the amount you have paid as an earnest money deposit. e. the market value of the property.
d
If you purchase a house worth $110,000 and make a 10% down payment, how much would 1 point cost at closing? a. $765 b. $1,530 c. $1,800 d. $990 e. $1,100
d
Jana has $1,500 for a down payment and thinks she can afford monthly payments of $300. If she can finance a vehicle with a 7%, 4-year loan from a credit society, what is the maximum loan amount Jana can afford? a. $17,900 b. $14,208 c. $18,028 td. $12,528 e. $16,028
d
Jane and Smith are considering the purchase of a home in downtown Minneapolis. They approached Larson's Mortgagers Inc. to arrange for the financing needed for their home. Jane and Smith have made use of _____ in the purchase of their home a. a real estate short sale b. an insurance c. an earnest money deposit d. a prequalification e. a contingency clause
d
The loss in the value of an automobile over time is called: a. the loan payment. b. the purchase commission. c. maintenance. d. depreciation. e. the sales price.
d
The monthly interest on your mortgage was $690; you paid $650 as your monthly payment on the loan. This is an example of: a. an indexed equity. b. a fixed interest expense. c. a growing equity. d. a negative amortization e. a shrinking principal.
d
When shopping for a lease, you want: a. a high money factor. b. a low residual value. c. high lease payments d. a low capitalized cost. e. a high capitalized cost
d
Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? a. $14,079 b. $16,879 c. $14,400 d. $15,265 e. $12,765
d
Kurt has $4,500 for a down payment and thinks he can afford monthly payments of $300. If Kurt can finance a vehicle with a 7%, 4-year loan from the automobile dealer, what is the maximum amount he can afford to spend on the car?a. $18,028 b. $12,528 c. $14,400 d. $17,028 e. $16,028
d
Jackie is in the 28% marginal tax bracket and has no other itemized deductions except those related to her home. If her standard deduction is $6,100 and she incurs the following costs related to housing, how much tax savings will she receive as a result of her home purchase? a. $5,040 b. $0 c. $2,800 d. $13,250 e. $3,332
e
The _____ governs closings on owner-occupied houses, condominiums, and apartment buildings of four units or fewer. a. Equal Credit Opportunity Act b. Mortgage Lenders Act c. Truth-in-Lending Act d. Real Estate Agents Act e. Real Estate Settlement Procedures Act
e
The price of the car you are leasing is called the: a. capital cost reduction. b. purchase option c. money factor. d. residual value. e. capitalized cost.
e
When you lease your apartment from the corporation that owns the building and your lease is an ownership share, your apartment is: a. a single family home. b. a row house. c. a condominium d. a mobile home. e. a cooperative.
e
Which of the following is a type of down payment on the car you are leasing? a. Capitalized cost b. Residual value c. Purchase option d. Money factor e. Capital cost reduction
e