Question 1

The federal government encourages home ownership by allowing tax advantages to home owners.

Accepted Answer

The federal government provides tax benefits such as mortgage interest deductions and property tax deductions to encourage home ownership.

Question 2

The insurance policies for a single family home and for a condominium are identica.

Accepted Answer

Insurance policies for a single-family home and a condominium differ due to the distinct nature of ownership and responsibilities associated with each type of property.

Question 3

One of the factors that determine your insurance rate is where you live.

Accepted Answer

Insurance companies consider the location of the insured because it can affect the likelihood of claims, such as crime rates or natural disaster risks in the area.

Question 4

What percentage of homes in the United States are owner occupied?
A) 20%
B) 40%
C) 68%
D) 90%

Accepted Answer

As of recent data, approximately 65-68% of homes in the United States are owner-occupied.

Question 5

The Federal Housing Administration (FHA):
A) loans money for low-income housing.
B) insures loans to protect private lenders from losses.
C) loans money for investment purposes.
D) sets the interest rate for all lenders.

Accepted Answer

The FHA insures loans made by private lenders, reducing their risk and encouraging them to offer mortgages to borrowers who might not otherwise qualify.

Question 6

Equity is defined as:
A) the fair market value of your home minus the amount you owe on loan(s) against the property.
B) the difference between the purchase price of your home and the current fair market value of your home.
C) the difference between the fair market value and the amount that has been depreciated for income tax purposes.
D) the real cost of borrowing purchase money for a house.

Accepted Answer

Equity is the difference between the fair market value of a property and the outstanding balance of all liens on the property.

Question 7

The fact that turning a real estate asset into cash can be time consuming is referred to as:
A) liquidity.
B) risk of loss.
C) illiquidity.
D) convertibility.

Accepted Answer

Illiquidity refers to the difficulty and time-consuming nature of converting an asset, like real estate, into cash.

Question 8

One of the main obstacles to owning a home might include:
A) a regionally high unemployment rate.
B) a glut of homes in certain areas.
C) a glut of homes in a certain price range.
D) lack of cash for a down payment and closing costs.

Accepted Answer

Lack of cash for a down payment and closing costs is a common obstacle for many potential homebuyers, as these are significant upfront expenses required to secure a mortgage and purchase a home.

Question 9

It is possible to research the history of a parcel of real estate by researching records that have been filed at:
A) the district court.
B) the federal courthouse.
C) the county courthouse.
D) the local bank.

Accepted Answer

The county courthouse typically maintains public records related to real estate, such as deeds, mortgages, and property tax records, which can be used to research the history of a parcel of real estate.

Question 10

Before making an offer on a piece of property, it might be wise to check:
A) the information at the tax appraiser's office.
B) the information at the tax collector's office.
C) the information at the building inspector's office.
D) all of the above

Accepted Answer

Checking all these sources provides comprehensive information about property taxes, assessments, and any building code violations or issues, which are crucial before making an offer.

Question 11

If you own a house worth $160,000 that is insured for $80,000 and you have a fire that causes $40,000 in damage, how much will your insurance pay for your claim?
A) $40,000
B) $32,000
C) $20,000
D) Nothing

Accepted Answer

The answer of If you own a house worth $160,000...

Question 12

The principal of indemnity states that:
A) every claim should indemnify the property owner.
B) an insured person will not be reimbursed more than the economic loss he or she actually sustains.
C) premiums may not exceed 50% of the value of a mortgage.
D) lower insurance deductibles mean lower premiums.

Accepted Answer

The principle of indemnity ensures that an insured person is compensated only to the extent of their actual economic loss, preventing them from profiting from an insurance claim.

Question 13

If you borrow money to purchase a home in a floodplain:
A) your regular homeowners insurance policy covers floods.
B) you must purchase separate flood insurance.
C) you must build a retaining wall to keep out the flood waters.
D) you may obtain a waiver from FEMA and therefore be exempt from needing insurance against flooding.

Accepted Answer

Regular homeowners insurance policies do not cover flood damage, so if you purchase a home in a floodplain, you are typically required to buy separate flood insurance.

Question 14

Who may cancel an insurance policy?
A) The insurance company or the insured party
B) Only the insurance company
C) Only the insured party
D) No one, because it is a contract with a written term

Accepted Answer

Both the insurance company and the insured party typically have the right to cancel an insurance policy, subject to the terms and conditions outlined in the policy agreement.

Question 15

When choosing an insurance company, which of the following factors should you consider?
A) Cost
B) The financial stability of the insurance company
C) The insurance company's claim payment record
D) All of the above

Accepted Answer

All of the factors listed (cost, financial stability, and claim payment record) are important considerations when choosing an insurance company.

Question 16

What is the difference between an excise tax and a real property tax?

Accepted Answer

The answer of What is the difference between an excise...

Question 17

Why can't you take out insurance on your neighbor's house?

Accepted Answer

The answer of Why can't you take out insurance on...

Question 18

What is the difference between insurance that has replacement cost and insurance that has an actual cash value clause?

Accepted Answer

The answer of What is the difference between insurance that...

Question 19

Under most insurance policies, does it matter if your house will be vacant for six months while you sail around the world?

Accepted Answer

The answer of Under most insurance policies, does it matter...

Question 20

What is meant by the term "house poor"?

Accepted Answer

The answer of What is meant by the term "house...

Quiz 2: Concepts of Home Ownership

The federal government encourages home ownership by allowing tax advantages to home owners.

The insurance policies for a single family home and for a condominium are identica.

One of the factors that determine your insurance rate is where you live.

What percentage of homes in the United States are owner occupied?

The Federal Housing Administration (FHA) :

Equity is defined as:

The fact that turning a real estate asset into cash can be time consuming is referred to as:

One of the main obstacles to owning a home might include:

It is possible to research the history of a parcel of real estate by researching records that have been filed at:

Before making an offer on a piece of property, it might be wise to check:

If you own a house worth $160,000 that is insured for $80,000 and you have a fire that causes $40,000 in damage, how much will your insurance pay for your claim?

The principal of indemnity states that:

If you borrow money to purchase a home in a floodplain:

Who may cancel an insurance policy?

When choosing an insurance company, which of the following factors should you consider?

What is the difference between an excise tax and a real property tax?

Why can't you take out insurance on your neighbor's house?

What is the difference between insurance that has replacement cost and insurance that has an actual cash value clause?

Under most insurance policies, does it matter if your house will be vacant for six months while you sail around the world?

What is meant by the term "house poor"?