Deck 15: The Cost of Home Ownership

Question 1

A mortgage of $80,000 with 2 points means the borrower would have to pay at closing $800.

Answer 1

False

Question 2

Using the table in the handbook, the total cost of interest on a home purchased for $200,000 with 30% down at 7% for 35 years is $235,732.

Answer 2

True

Question 3

Graduated payments let the borrower pay more at the beginning of the mortgage and make lower payments later.

Answer 3

False

Question 4

A point is 1% of the amount of the loan.

Question 5

Subprime loans are very safe.

Question 6

Banks cannot provide amortization schedules to borrowers.

Question 7

A variable rate mortgage is always fixed.

Question 8

A larger down payment is needed for a 15-year fixed-rate mortgage than for a 30-year fixed-rate mortgage.

Question 9

Interest rates on mortgages do not vary from bank to bank.

Question 10

A monthly payment of $850 on a 30-year $80,000 mortgage results in a total cost of interest of $226,000.

Question 11

The total of all monthly payments plus the amount of the mortgage equals the total cost of interest.

Question 12

Interest is equal to principal times rate divided by time.

Question 13

From the table in the handbook, the monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12.

Question 14

The amount of the down payment one makes on a home directly affects the size of the monthly payment.

Question 15

From the table in the handbook, the monthly payment on a home purchased for $150,000 with 30% down at 13% for 30 years is $1,132.53.

Question 16

Points are to be paid off as part of the regular monthly payment.

Question 17

A biweekly mortgage results in six extra payments per year.

Question 18

The reduction of principal each month is equal to the payment minus the interest.

Question 19

All mortgages must be paid monthly.

Question 20

The major portion of the monthly payment is used to pay off the principal.

Question 21

Craig Hammer purchased a new condominium for $225,000. The bank required a $30,000 down payment. Assuming a rate of 8% on a 25-year mortgage, Craig's monthly payment is (use the table in the handbook):

A)$1,431.30
B)$1,413.30
C)$1,505.40
D)$1,505.04
E)None of these

Question 22

Chin Woo bought a home for $160,000. He put down 20%. The mortgage is at 8 1/2% for 25 years. Using the table in the handbook, his yearly payments are:

A)$1,238.00
B)$12,380.16
C)$12,830.61
D)$12,380.61
E)None of these

Question 23

Jill Diamond bought a home for $190,000 with a down payment of $65,000. The rate of interest was 7% for 35 years. Her monthly mortgage payment is:

A)$843.75
B)$834.57
C)$798.75
D)$978.57
E)None of these

Question 24

Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of:

A)$207,270.95
B)$207,720.59
C)$207,720.95
D)$207,270.59
E)None of these

Question 25

All mortgage payments must be paid:

A)Weekly
B)Monthly
C)Biweekly
D)Semiannually
E)None of these

Question 26

An amortization schedule shows:

A)Balance of interest outstanding
B)The increase to principal
C)Increase in loan outstanding
D)Portion of payment broken down to interest and principal
E)None of these

Question 27

The total cost of interest is equal to the total of all monthly payments:

A)Divided by amount of mortgage
B)Minus amount of mortgage
C)Plus amount of mortgage
D)Times amount of mortgage
E)None of these

Question 28

Abe Aster bought a new split level for $200,000. Abe put down 30%. Assuming a rate of 11 1/2% on a 30-year mortgage, Abe's monthly payment is (use the table in the handbook):

A)$1,423.80
B)$1,387.40
C)$1,367.80
D)$1,982.00
E)None of these

Question 29

Dick Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a mortgage for 25 years at 8%. The total interest cost of the loan is:

A)$184,000.00
B)$327,372.80
C)$242,411.00
D)$242,144.00
E)None of these

Question 30

Stu Reese has a $150,000 7 1/2% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of:

A)$149,729.40
B)$149,927.40
C)$72.60
D)$149,910.40
E)None of these

Question 31

Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

A)$800
B)$3,200
C)$2,400
D)$1,600
E)None of these

Question 32

Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is:

A)$11,029.20
B)$11,920.20
C)$919.10
D)$18,782.40
E)None of these

Question 33

Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 1/2% for 30 years. Using the table in the handbook, his monthly payment is:

A)$1,319.04
B)$1,319.40
C)$1,216.80
D)$1,139.40
E)None of these

Question 34

Abby's monthly payment is $781.60 per month. The principal is $80,000 at a rate of 11½% for 35 years. The principal reduction after the first mortgage payment is $14.93.

Question 35

Points represent:

A)2% of the amount of the loan
B)Monthly payments
C)An additional cost of receiving the mortgage
D)3% up-front payment
E)None of these

Question 36

The difference between the monthly payments on a $120,000 home at 6 1/2% and at 8% for 25 years is (use the table in the handbook):

A)$81.12
B)$151.02
C)$115.20
D)$91.12
E)None of these

Question 37

Bill's monthly payment is $1,056 per month. The principal is $100,000 at a rate of 12½% for 35 years. The amount of interest for Bill's first payment is $1,011.67.

Question 38

Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. The points in dollars cost Megan:

A)$2,400
B)$2,800
C)$4,200
D)$8,200
E)None of these

Question 39

Graduated payments result in the borrower paying:

A)More at the beginning of the mortgage
B)Less at the beginning of the mortgage
C)Less at the end of the mortgage
D)The mortgage at 1/2 the standard rate
E)None of these

Question 40

A variable rate mortgage means:

A)The interest rate is not fixed
B)The interest rate is fixed for five years
C)The rate is not subject to change
D)Larger monthly payments than a fixed rate
E)None of these

Question 41

Match the following terms with their definitions.

-Graduated payments

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 42

With a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?

A)$50,236.80
B)$5,023.68
C)$545.76
D)$54,576
E)None of these

Question 43

With a mortgage of $88,000 at 11% for 25 years, by what amount is the principal reduced the first month?

Question 44

Match the following terms with their definitions.

-Variable rate

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 45

A $104,000 selling price with $24,000 down at 8 1/2% for 25 years results in a monthly payment of:

A)$644.80
B)$645.60
C)$546.06
D)$654.60
E)None of these

Question 46

Marsha Terban bought a home for $119,000 with a down payment of $19,000. Her rate of interest is 12 1/2% for 35 years. The balance of the mortgage at the end of the first month is:

A)$3.33
B)$98,944
C)$99,669.76
D)$99,985.67
E)None of these

Question 47

Tom Burke buys a home in Virginia for $139,000. He puts down 30% and obtains a mortgage for 25 years at 12%. The portion of the first payment that covers interest is:

A)$52.54
B)$1,025.54
C)$973.00
D)$97.30
E)None of these

Question 48

With a selling price of $125,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, calculate:
A. Principal
B. Payments per $1,000
C. Monthly mortgage payment
D. The total cost of interest

Question 49

Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What amount did Jen owe in interest?

A)$457,425.60
B)$606,823.20
C)$626,863.20
D)$600,000.00
E)None of these

Question 50

Match the following terms with their definitions.

-Biweekly

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 51

Match the following terms with their definitions.

-Points

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 52

A condo in Orange Beach, Alabama, is listed for $1.4 million with 20% down and financing at 5% for 30 years. What would the monthly payment be?

A)$7,518
B)$6,014.40
C)$6,041.20
D)$7,815.00
E)None of these

Question 53

Match the following terms with their definitions.

-Amortization schedule

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 54

Lucy purchased a home. Her monthly payments are $1,534. Her annual real estate tax is $3,000 along with an annual insurance premium of $1,800. Lucy's bank requires that her monthly payments include an escrow deposit for the tax and insurance. What is the total payment each month for Lucy?

Question 55

Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

A)$1,776
B)$1,402
C)$1,240.80
D)$1,420.80
E)None of these

Question 56

Match the following terms with their definitions.

-Short sale

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 57

With a selling price of $125,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, if the loan was for 25 years, what would be the difference in the total interest cost of the loan?

Question 58

Beverly Frost bought a home for $190,000 with a down payment of $19,000 at 7% for 25 years. Since then the rate has risen to 9%. How much more would her monthly payment be if she bought the house at 9%?

A)$208.97
B)$436.40
C)$143.00
D)$227.43
E)None of these

Question 59

Darlene Ramirez bought a home for $140,000. She put 20% down with a mortgage rate at 7.5% for 25 years. Her yearly payments are:

A)$1,776
B)$9,932.16
C)$12,415.20
D)$9,329.61
E)None of these

Question 60

Match the following terms with their definitions.

-Mortgage

A)Breakdown of principal and interest
B)One-time up-front payment
C)Mortgage payments rise in later years
D)Loan
E)Not fixed
F)Can prevent foreclosures
G)26 payments per year

Question 61

Alice Roa is concerned about the financing of a home. She saw a home selling for $120,000. If she puts 10% down, find her monthly payment and total cost of interest over the cost of the loan given each assumption:
A. 30 years 8%
B. 30 years 9%
C. 30 years 10%
D. 30 years 11%

Question 62

Nancy Karnes bought a home for $143,000 with a down payment of $15,000. Her rate of interest is 9% for 35 years. Calculate her:
A. Monthly payment
B. First payment broken down into interest and principal
C. Balance of mortgage at end of month

Question 63

Assume a selling price of $95,000, a down payment of $20,000, and a mortgage at 10% for 30 years. If the loan was for 25 years, what would be the difference in the total interest cost of the loan?

Question 64

With a selling price $100,000, a 20% down payment, and a mortgage of 12% for 25 years, calculate:
A. Amount of mortgage
B. Monthly payment
C. Interest portion of first payment
D. Principal portion of first payment

Question 65

With a selling price $95,000, a down payment of $20,000, and a mortgage rate of 10% for 30 years, calculate:
A. Principal
B. Payments per $1,000
C. Monthly mortgage payment

Question 66

Use the table provided in the handbook. Al Bang is worried about the financing of his new home. The house sells for $70,000. If he puts down 20%, what will Al's payment be, and what would be the total cost of interest over the cost of the loan for each assumption?
A. 25 years 12%
B. 25 years 13%
C. 25 years 13 3/4%
D. 25 years 14 3/4%

Question 67

Use the table provided in the handbook. With a mortgage of $80,000 at 13% for 25 years, by what amount is the principal reduced the first month?

Question 68

Angie Roy took out an $80,000 mortgage on a ski chalet in Vermont. The bank charged 3 points at closing. What did the points cost Angie at closing?

Question 69

A condo is advertised in The Wall Street Journal for $350,000. It states in the ad that a 20% down payment is required. The rate of interest is 11% on a 25-year mortgage. What would be (A)the monthly payment and (B)the total cost of interest?

Question 70

With a selling price $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years, calculate:
A. Principal
B. Payments per $1,000
C. Monthly mortgage payment

Question 71

John Lee bought a home in Des Moines, Iowa, for $135,000. He put down 15% and obtained a mortgage for 30 years at 8 1/2%. What is (A)John's monthly payment and (B)the total interest cost of the loan?

Question 72

Joy Linman bought a home in Boca Raton, Florida, for $350,000 with a down payment of $50,000. Her rate of interest is 9 ½% for 25 years. Calculate the total cost of interest for Joy Linman.

Question 73

With a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years, calculate the total cost of interest.

Question 74

With a selling price $95,000, a down payment of $20,000, and a mortgage at 10% for 30 years, calculate the total cost of interest.

Question 75

With a selling price $140,000, a 20% down payment, and interest at 10 ½% for 25 years, calculate:
A. Amount of mortgage
B. Monthly payment
C. Interest portion of first payment
D. Principal portion of first payment

Question 76

Joy Linman bought a home in Boca Raton, Florida, for $350,000 with a down payment of $50,000. Her rate of interest is 9 ½% for 25 years. Calculate Joy's monthly mortgage payment.

Question 77

Al Bank is worried about financing his new home. The house sells for $190,000. If he puts down 20%, what will Al's payment be at the following rates?
A. Monthly Payment and Total Cost of Loan given loan for 25 years at 10%
B. Monthly Payment and Total Cost of Loan given loan for 25 years at 10 ½%
C. Monthly Payment and Total Cost of Loan given loan for 25 years at 11%
D. Monthly Payment and Total Cost of Loan given loan for 25 years at 12%

Question 78

Jackie Revez purchased a new home in Riverside Park. The purchase price was $210,000, and she put down 30%. Her mortgage is 10 ½% for 30 years. What is the outstanding balance of her loan after the first month?

Question 79

Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If the loan was for 25 years, what would be the difference in the total interest cost of the loan?

Question 80

Use the table provided in the handbook. With a mortgage of $91,000 at 12% for 25 years, by what amount is the principal reduced the first month?