Deck 7: Selecting and Financing Housing

Question 1

An advantage of renting is pride of ownership.

Answer 1

False

Question 2

Merrill bought a house and applied for a loan through the VA (Veterans Administration).The VA will provide the down payment when he closes on the house.

Answer 2

False

Question 3

When Brett's apartment lease ends,he should receive his entire security deposit back even though the carpet has been damaged while he was living there.

Answer 3

False

Question 4

A handyman's special is a home that needs work and is priced lower than homes in better condition.

Question 5

An approved mortgage application usually locks in an interest rate for 60-120 days.

Question 6

A condominium is a form of housing in which the units in a building are owned by a nonprofit organization.

Question 7

The most common conventional mortgage is the 20-year ARM.

Question 8

Mortgage points are paid at the end of the mortgage.

Question 9

When interest rates are high and the demand for homes is low,prices of homes will likely be at a premium.

Question 10

Rental insurance isn't important since the landlord's insurance on the building includes coverage on all tenants' belongings.

Question 11

A disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments.

Question 12

Lenny the landlord has the right to take legal action against Tina the tenant if she does not pay her rent on a timely basis.

Question 13

Angela wanted to rent an apartment,so her landlord required her to sign a lease.The lease is a legal document that defines the conditions of her rental agreement.

Question 14

Your lifestyle affects your housing buying decisions.

Question 15

Most new mortgages are assumable.

Question 16

Private mortgage insurance is usually required if the down payment for a home is less than 30%.

Question 17

Your decision to rent or to buy your residence should be based solely on lifestyle factors.

Question 18

As interest rates increase,more people have the ability to afford an average-priced home.

Question 19

A landlord has the right to sublet an apartment.

Question 20

A duplex is a house with two or more separate dwellings.

Question 21

The purpose of an escrow account is to pay the points at closing.

Question 22

If your home is assessed for $200,000,the market value of the home should be less than $200,000.

Question 23

About 50% of home sales are by owner.

Question 24

Most tenants sign a lease.Which of the following is part of a lease agreement?

A) The amount of the down payment.
B) The conditions under which the landlord may enter the apartment.
C) The interest rate for a lease loan.
D) The name and address of the buyer.
E) The sale date.

Question 25

Which of the following is a disadvantage of renting?

A) Renters have fewer responsibilities than home owners.
B) Tenants cannot take tax deductions for mortgage interest and property taxes.
C) Renters usually do not have to be concerned with maintenance and repairs.
D) Taking possession of a rental unit is less expensive than buying a home.
E) Renting can be more convenient for those who move frequently.

Question 26

The owner/landlord is known as the

A) Lease.
B) Lessee.
C) Lessor.
D) Renter.
E) Sublease.

Question 27

Most low- and middle-income people will NOT qualify for a VA-guaranteed loan.

Question 28

Which of the following is NOT correct?

A) Renting is usually less expensive in the short run.
B) Home ownership usually has long-term financial advantages.
C) Lifestyle and financial factors should be analyzed to determine if you should rent or buy.
D) Traditional financial guidelines suggest that your home should cost about five times your annual income.
E) Renting offers mobility.

Question 29

A balloon mortgage has fixed monthly payments for a period of time.At the end of that time,the entire principal balance must be paid in full.

Question 30

Home improvements will definitely increase the selling price of a house.

Question 31

Which of the following is an advantage of renting?

A) Noise from parties may be monitored closely.
B) Renters have fewer responsibilities than home owners.
C) Tenants cannot take tax deductions for mortgage interest and property taxes.
D) Tenants may be subject to restrictions regarding decorating.
E) All of these are advantages of renting.

Question 32

A real estate agent can provide a service to save you time and effort with selling your home.

Question 33

This provides the tenant protection from rent increases.

A) Lease
B) Lessee
C) Lessor
D) Rental statement
E) Sublease

Question 34

An advantage of a buy-down is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.

Question 35

The opportunity to have another person take over rent payments and live in the rental unit is called (a)

A) Lease.
B) Lessee.
C) Lessor.
D) Rental agreement.
E) Subletting.

Question 36

If you pay an extra $100 per month on your mortgage,your total loan principal will decrease and your total interest will remain the same.

Question 37

At the closing of a home purchase,the buyer conducts a walk-through of the property.

Question 38

The tenant is the

A) Lease.
B) Lessee.
C) Lessor.
D) Owner.
E) Sublease.

Question 39

An advantage of a second mortgage is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.

Question 40

A legal document that includes information about the due date of monthly rent is called a

A) Lease.
B) Lessee.
C) Lessor.
D) Rental statement.
E) Sublease.

Question 41

Frank and Diane want to buy a house.Which of the following do they need before they purchase a house?

A) Down payment.
B) Home owner's insurance.
C) Mortgage interest.
D) Mortgage principal.
E) Real estate taxes.

Question 42

Madeline wants to purchase a larger house.However,she has not yet sold her current home.She may want to include a(n)________ in her offer.

A) appraisal
B) contingency clause
C) dual agent
D) earnest money
E) purchase agreement

Question 43

Which of the following expenses is NOT usually recommended or necessary for a tenant?

A) Security deposit.
B) Utilities.
C) Renter's insurance.
D) All of these are recommended or necessary.
E) None of these is correct.

Question 44

Paul and Lora built their home.When they researched contractors,they paid attention to all of the following except

A) Contractor's reputation and experience.
B) Contractor's relationship with suppliers and subcontractors.
C) Payment arrangements during construction.
D) Time and payment schedules.
E) Contractor's property tax payments during construction.

Question 45

Pauline just submitted an offer on her dream home.To show that she is serious,she also included a(n)

A) Appraisal.
B) Contingency clause.
C) Dual agent.
D) Earnest money.
E) Purchase agreement.

Question 46

Georgina and Henry are looking at houses.Which of the following is correct?

A) A "handyman's special" will be set at a higher price than one that is in "move-in condition."
B) They should assess the school system in the area they want to live.
C) The amount they can afford for housing will be primarily determined by the down payment.
D) Their first house should be their "dream house" and contain all the features desired.
E) All of these are correct.

Question 47

When Nancy buys her house,the mortgage company will probably conduct a(n)

A) Appraisal.
B) Contingency clause.
C) Dual agent.
D) Earnest money.
E) Purchase agreement.

Question 48

What should a home buyer consider when evaluating a house?

A) Zoning laws.
B) Location of businesses and future construction projects.
C) School system.
D) Property values of the community.
E) All of these should be evaluated.

Question 49

Elaine purchased her living unit in a building with five other separate units.She purchased a

A) Condominium.
B) Duplex.
C) Manufactured home.
D) Single-family dwelling.
E) Townhouse.

Question 50

Which of the following is a form of housing in which the units are owned by a nonprofit organization?

A) Condominium
B) Cooperative housing
C) Manufactured home
D) Single-family dwelling
E) Townhouse

Question 51

Diane purchased her house and had it assembled before it was moved to her lot.She purchased a

A) Condominium.
B) Cooperative housing.
C) Manufactured home.
D) Single-family dwelling.
E) Townhouse.

Question 52

Opal is a real estate agent who represents the buyer as well as the seller.In some states,the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as a(n)

A) Appraisal.
B) Contingency clause.
C) Dual agent.
D) Earnest money.
E) Purchase agreement.

Question 53

Which of the following is NOT a benefit of home ownership?

A) Stability of residence
B) Personalized living location
C) Deductibility of mortgage interest
D) Deductibility of real estate taxes
E) Maintenance and costs of repairs and home improvements

Question 54

When Ingrid was selling her house,she contacted Gabe,her real estate agent,to help her with the sale.Gabe's services included all of the following except

A) Negotiating a settlement price.
B) Receiving an offer from a buyer.
C) Representing Ingrid at the closing.
D) Showing Ingrid's home to potential buyers.
E) Home appraisal.

Question 55

Which of the following is a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building?

A) Condominium
B) Cooperative housing
C) Manufactured home
D) Single-family dwelling
E) Townhouse

Question 56

Which of the following is a legal form of ownership in which the owners pay a monthly fee for maintenance of the common areas?

A) Condominium
B) Cooperative housing
C) Manufactured home
D) Single-family dwelling
E) Apartment

Question 57

Kelly selected a home and submitted an offer to the seller.

A) The seller must accept her offer.
B) Her offer must have been for the asking price.
C) The seller's price is affected by Kelly's need to buy.
D) The seller may choose to provide a counteroffer.
E) Kelly will receive earnest money when she presents the offer.

Question 58

Donald wanted to buy a house in the country,so he sought advice from his cousin Evan.Evan explained the advantages and disadvantages of home ownership; however,he had some information incorrect.Which of the following is incorrect?

A) An advantage is that Donald can deduct mortgage interest and real estate taxes.
B) A disadvantage is that Donald is responsible for maintenance and costs of repairs and home improvements.
C) An advantage is that the down payment required is less than the security deposit for a rental.
D) A disadvantage is that real estate taxes are a major expense for home owners.
E) An advantage is that Donald can paint his house bright purple with green trim to match his college's colors.

Question 59

This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property.

A) Lease
B) Lessee
C) Lessor
D) Rental statement
E) Sublease

Question 60

Jim wants to make an offer to buy an older house.At this point,he should

A) Move into the house.
B) Set up a home inspection.
C) Contact the seller to purchase his lawn tools.
D) Close the purchase transaction.
E) Sign his mortgage papers.

Question 61

Which of the following is the document that transfers ownership of property from one party to another?

A) Deed
B) Escrow
C) Mortgage
D) PMI
E) Points

Question 62

Because Dan served in the army,he should be eligible for a(n)

A) ARM.
B) FHA loan.
C) Negative amortization.
D) Payment cap.
E) VA loan.

Question 63

Trenton wants to buy a house but can provide only a 10% down payment.He probably will be required to have

A) Amortization.
B) Escrow.
C) Lock.
D) PMI.
E) Points.

Question 64

Yvette has a flexible-rate mortgage that has a maximum monthly increase.This feature is called a(n)

A) ARM.
B) FHA loan.
C) Negative amortization.
D) Payment cap.
E) VA loan.

Question 65

Which of the following is an account used to pay property taxes and home insurance?

A) Deed
B) Escrow
C) Mortgage
D) PMI
E) Points

Question 66

When Smee applied for a loan,he was assured that his rate would not change if he closed within a specific time period.Smee had a(n)______ on the interest rate.

A) amortization
B) escrow
C) lock
D) PMI
E) points

Question 67

Private mortgage insurance

A) Cannot be avoided.
B) Is part of all mortgages.
C) Is usually required if the down payment is less than 25%.
D) Must be terminated automatically when the home owner's equity reaches 22% of the property value at the time the loan was initiated.
E) Protects the buyer from financial loss if the value of the home increases.

Question 68

If you have an interest rate subsidy from a home builder or real estate developer,you have a

A) Balloon mortgage.
B) Buy-down.
C) Convertible ARM.
D) Growing-equity mortgage.
E) Interest-only mortgage.

Question 69

A reverse mortgage

A) Is the same thing as a second mortgage.
B) Offers a home buyer a home loan with a 30-year payment period.
C) Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.
D) Two of these are correct.
E) All of these are correct.

Question 70

Ricky has a conventional mortgage.He can monitor his interest and principal payments using _____ information.

A) amortization
B) escrow
C) lock
D) PMI
E) points

Question 71

Quinn applied for a loan.He provided information about his finances and the home he plans to purchase.Results of the mortgage calculation included all of the following except

A) Expected maintenance costs.
B) The home purchase price he can afford.
C) The monthly mortgage payment he can afford.
D) The mortgage amount he can afford.
E) All of these are correct.

Question 72

Major factors that affect the affordability of your mortgage include all of the following except

A) The amount available for a down payment.
B) Current mortgage rates.
C) Income.
D) Length of the loan.
E) Size of the home.

Question 73

The primary benefit of a home equity loan is

A) Its limited availability.
B) The deductibility of the loan interest on federal taxes.
C) The required monthly payments.
D) The use of the home as collateral for the loan.
E) None of these is a primary benefit.

Question 74

Paul is 23 years old and has a small amount to use as a down payment for his first house.He might be eligible for a(n)

A) ARM.
B) FHA loan.
C) Negative amortization.
D) Payment cap.
E) VA loan.

Question 75

Veronica has had a variable-rate mortgage for several years.Unfortunately,the monthly payments have not covered her interest owed.As a result,her home equity is decreasing because of

A) ARM.
B) FHA loan.
C) Negative amortization.
D) Payment cap.
E) VA loan.

Question 76

If you do not pay back any of the loan amount for a portion of the loan period,you have a(n)

A) Balloon mortgage.
B) Buy-down.
C) Convertible ARM.
D) Growing-equity mortgage.
E) Interest-only mortgage.

Question 77

Rebecca paid extra money to reduce her mortgage interest rate.That extra money is called

A) Amortization.
B) Escrow.
C) Lock.
D) PMI.
E) Points.

Question 78

Ursula wants to have an interest rate that can increase or decrease during the life of her loan.She should look for a(n)

A) ARM.
B) FHA loan.
C) Negative amortization.
D) Payment cap.
E) VA loan.

Question 79

If you have a mortgage that has fixed monthly payments and a very large final payment,you have a(n)

A) Balloon mortgage.
B) Buy-down.
C) Convertible ARM.
D) Growing-equity mortgage.
E) Interest-only mortgage.

Question 80

During a home purchase closing,you should

A) Order an appraisal.
B) Pay all closing costs, settle last-minute items, and sign documents.
C) Schedule an inspection of the condition of the home.
D) Sign documents and pay half of the settlement costs.
E) Review zoning laws for the municipality where the home is located.