Deck 9: Obtaining Affordable Housing

Question 1

A lease typically protects the landlord but not the renter.

Answer 1

False

Question 2

An original tenant who subleases to another tenant is automatically released from financial responsibility for future rent payments.

Answer 2

False

Question 3

It is wise to make a list of all damages and defects in an apartment before moving in and when moving out.

Answer 3

True

Question 4

Renters generally pay out less money in terms of cash flow than homeowners.

Question 5

A housing unit that is detached from other units is called a single-family dwelling.

Question 6

In most jurisdictions,landlords are prohibited from harassing tenants who report violations of building codes or other tenant rights.

Question 7

Lease agreements may contain a variety of restrictions that are legally binding on tenants.

Question 8

The damage deposit is an amount paid in advance to a landlord for normal wear and tear on rental property.

Question 9

Most younger people rent but 80 percent of those aged 55-64 are homeowners.

Question 10

The security deposit is an amount paid in advance to a landlord for normal wear and tear on rental property.

Question 11

With a cooperative,the owner holds a share of the corporation that owns and manages a group of housing units.

Question 12

Buying a home represents the largest expenditure most people ever make.

Question 13

The term cooperative describes a method of ownership for housing rather than a type of building.

Question 14

A lawsuit filed against a landlord for nonperformance may be heard in small claims court.

Question 15

The term condominium describes a type of building rather than a form of ownership.

Question 16

Most communities and housing developments have rules that govern such things as minimum lot size,the outside appearance and landscaping of the property,allowable secondary buildings,parking of vehicles,and other aspects of the use and appearance of the property.

Question 17

A price-to-rent ratio above 15 can mean that the prices for homes in a community are inflated.

Question 18

Federal regulations require that interest must be paid on security deposits.

Question 19

Subleasing means leasing the property from the original tenant to another tenant before the lease expires.

Question 20

Condominium owners enjoy greater tax advantages than cooperative owners since cooperative owners cannot deduct interest and property tax payments.

Question 21

A title to real property is the legal right of ownership interest.

Question 22

When estimating monthly housing costs after the purchase of a home,add an additional 10 to 15 percent to your mortgage loan payment for such things as homeowner's insurance,property taxes,maintenance,and upkeep.

Question 23

The process in which the lender sues the borrower to prove default and asks the court to order the sale of the property to pay the debt is called foreclosure.

Question 24

Title to real estate is transferred to a new owner through a deed.

Question 25

The actual transfer of ownership of real estate occurs at the closing.

Question 26

In a difficult housing market,borrowers simply choose not to pay their mortgage allowing the home to be foreclosed in a practice called negative amortization.

Question 27

The first attempt by a lender to dispose of a completely foreclosed property is at a foreclosure auction.

Question 28

A short sale occurs when a home sale is negotiated with the owner at a price below the actual balance of the debt on the home.

Question 29

All homes for sale carry some type of implied warranty.

Question 30

Couples buying a home should generally put ownership in both names.

Question 31

The abbreviation PITI stands for principal,interest,real estate taxes,and investment.

Question 32

Appreciation benefits of home ownership generally begin to be realized after one or two years of ownership.

Question 33

Mortgage insurance is generally required for almost all mortgage loans where the initial loan-to-value ratio is more than 80 percent.

Question 34

Preforeclosure is the time between when the homeowner has been notified by the lender that he or she is in default and the actual foreclosure has been completed.

Question 35

A loan origination fee,recording fee,and an appraisal fee are examples of miscellaneous expenses involved in buying a home.

Question 36

Typically if your home is foreclosed you will owe any remaining debt between what the home is sold for at auction and the amount owed on the mortgage.

Question 37

One point is equal to 1 percent of the price of the house.

Question 38

When lenders accept less than a 20 percent down payment,mortgage insurance is generally required.

Question 39

A private short sale occurs when a home sale is negotiated with the lender at a price below the actual balance of the debt.

Question 40

By law,interest points must be included when calculating the APR for the loan.

Question 41

Real estate property taxes are based on the value of the land,not the buildings.

Question 42

An escrow account is a special account at a financial institution where funds are held until they are paid to a third party.

Question 43

The back-end ratio compares all monthly debt payments and housing costs to gross monthly income.

Question 44

Home warranty insurance protects the home buyer in case the title to the property later is found to be faulty.

Question 45

For most homeowners,mortgage payments represent total housing costs.

Question 46

The time to prequalify for a mortgage is after you have made an offer to buy a property.

Question 47

You should always obtain a prequalification from a lender before your search for a home to buy.

Question 48

FHA mortgage insurance premiums may only be paid as a single up-front,lump-sum payment.

Question 49

Over 70 percent of homes have a mortgage.

Question 50

The front-end ratio compares the total annual expenditures for housing to the loan applicant's disposable income.

Question 51

Real estate property taxes generally range from 1 to 4 percent of the value of the home.

Question 52

The front-end ratio compares the total annual expenditures for housing to the loan applicant's gross annual income.

Question 53

The maximum down payment is based on the lender's desired loan-to-value ratio.

Question 54

Home warranty insurance is quite similar to a service contract on a vehicle or other product.

Question 55

Mortgage lenders generally prefer that total monthly debt payments and housing costs do not exceed 36 percent of gross monthly income.

Question 56

Closing costs may vary from 2 percent of the mortgage loan amount up to 7 percent.

Question 57

When estimating monthly housing costs,add an additional 40 or more percent to your loan amount payment for such things as homeowner's insurance,property taxes,maintenance,and upkeep.

Question 58

The FHA mortgage insurance premium can be paid up front in a lump-sum payment,or it can be financed.

Question 59

Mortgage insurance is generally required on any mortgage loan where the initial loan-to-value ratio is more than 70 percent.

Question 60

If you pay interest to borrow money from a family member to make the down payment on a home,you can only deduct that interest from your taxes if the down payment loan is secured by a lien on the property.

Question 61

Many communities have a multiple-listing service (MLS),which is an information and referral network among real estate brokers allowing properties listed with a particular broker to be shown by all other brokers.

Question 62

A lien is the legal right to take and hold property or to sell it in the event the borrower defaults on the loan.

Question 63

Offers to purchase and counteroffers are all part of the negotiating process in buying a house.

Question 64

The portion of a mortgage payment that is applied to the principal increases quickly in the early years of the loan.

Question 65

Most of the monthly payment during the early years of a mortgage loan goes for principal repayment.

Question 66

If a prospective home buyer simply changes his or her mind after putting up earnest money,he or she usually forfeits the money.

Question 67

A buyer's agent or broker serves as the buyer's representative in the real estate negotiations and transaction.

Question 68

A uniform settlement statement is a lender's promise to grant a loan.

Question 69

One formally applies for a mortgage loan only after signing a purchase contract.

Question 70

You would want to lock-in your mortgage interest rate if you expect rates to decline before the closing.

Question 71

Lenders use either a front-end or back-end ratio when setting limits on how much a home buyer can borrow.

Question 72

Most real estate agents are legally obligated to the buyer of a home.

Question 73

Real estate agents are usually paid by the buyer.

Question 74

The process of gradually paying off a mortgage loan though a series of periodic payments to the lender is called amortization.

Question 75

If the home seller rejects an offer after accepting earnest money,he or she must return the earnest money to the potential buyer.

Question 76

High-risk applicants of mortgage loans are referred to lenders in the sub-prime market.

Question 77

Some real estate brokers work for a flat fee rather than a commission based on the price of the house.

Question 78

When you apply for a mortgage loan you usually have the option of locking-in the rate at the time the loan is approved or accepting the rate in effect at the time of the closing.

Question 79

When the purchase contract is signed,the seller keeps the earnest money as a deposit against the purchase price.

Question 80

A prospective borrower must be given a good-faith estimate of all specific closing costs when they apply for a mortgage.