Question 1

Which of the following statements is not true of mobile housing?

Accepted Answer

Mobile homes often do not receive the same type of financing as traditional single-family dwelling units. They are frequently financed through personal property loans rather than mortgage loans, which can have different terms and conditions.

Question 2

Which of the following statements is not true of cooperative housing?

Accepted Answer

Shareholders in a cooperative cannot sell their ownership to anyone they want. Typically, there are restrictions on who can purchase a share and become a member of the cooperative. This is to ensure that the cooperative maintains its desired community and demographic makeup.

Question 3

A single taxpayer may

Accepted Answer

A single taxpayer can exclude up to $250,000 of the capital gain on the sale of a home if they have lived in the home for a period of two years. This exclusion can be taken every time they sell a home.

Question 4

The Federal National Mortgage Corporation recommends that you total monthly debt payments,including housing expenses,not exceed

Accepted Answer

The Federal National Mortgage Corporation recommends that total monthly debt payments, including housing expenses, should not exceed 33 to 36 percent of gross monthly income. This is to ensure that individuals do not take on too much debt and can maintain financial stability.

Question 5

Which of the following statements concerning the housing market is false?

Accepted Answer

Interest rates have not sharply risen over the last decade, but have actually remained relatively low.

Question 6

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you itemize deductions.Home ownership will reduce your tax payments by about how much?

Accepted Answer

The reduction in tax payments is calculated by multiplying the interest portion of the mortgage payments ($8,000) by the marginal tax rate (30%). Therefore, $8,000 * 0.30 = $2,400.

Question 7

Which of the following statements concerning home ownership is false?

Accepted Answer

The 1990s did not experience a decade-long fall in housing affordability. In fact, the period saw significant growth in the housing market, partly due to lower interest rates and various government policies aimed at promoting home ownership.

Question 8

Which of the following statements is not true of condominium housing?

Accepted Answer

The statement that a prospective buyer must be approved by the condominium association is not universally true for all condominiums. While some condominium associations may require approval, this is not a standard practice for all condominium housing, making this statement not true in a general sense.

Question 9

A decline in the Housing Affordability Index indicates that housing

Accepted Answer

A decline in the Housing Affordability Index means that housing has become less affordable for the typical family, indicating that either housing prices have increased, family income has decreased, or both. This means that it has become more difficult for families to purchase and finance homes, and they may need to spend a larger portion of their income on housing costs.

Question 10

One rule of thumb mentioned in the text is that your home purchase should price equal about

Accepted Answer

The text states that a rule of thumb for determining the price of a home purchase is that it should equal about two and one-half times your after-tax income.

Question 11

Recent problems in the subprime mortgage have been attributed to which of the following?

Accepted Answer

All of the options have contributed to the subprime crisis. Increased lending to borrowers with poor credit histories and adjustable mortgages with low initial rates are both elements of lax lending standards. The combination of these practices resulted in a high number of defaults, leading to the subprime crisis.

Question 12

The subprime mortgage market consists of

Accepted Answer

The subprime mortgage market consists of borrowers with poor credit history and poorly documented income who are considered higher risk borrowers and as such, are charged higher interest rates on their loans.

Question 13

Which of the following statements is not true of condominium housing?

Accepted Answer

The condominium association does not hold mortgages on individual units. Each owner is responsible for obtaining their own mortgage for their unit.

Question 14

If your affordable home mortgage is $100,000 and you need a 20% down payment,your affordable home purchase price is

Accepted Answer

If the mortgage is $100,000 and the down payment is 20%, then the total home purchase price would be $125,000. To find out, you would take the mortgage amount ($100,000) and divide it by the percentage of the home purchase price that it represents (80%, since the down payment is 20%). This gives you $125,000. Therefore, choice B is the correct answer.

Question 15

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you do not itemize deductions.Home ownership will reduce your tax payments by about how much?

Accepted Answer

Since you do not itemize deductions, you cannot deduct mortgage interest from your taxable income. Therefore, home ownership does not reduce your tax payments.

Question 16

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you itemize deductions.Your mortgage payments after taxes are how much?

Accepted Answer

Since the interest payments of $8,000 can be itemized as a deduction, the amount of taxable income is reduced by $8,000. Therefore, the tax savings would be:

Tax savings = interest payments x marginal tax rate = $8,000 x 0.3 = $2,400

Thus, the mortgage payments after taxes would be:

$10,000 - $2,400 = $7,600 (Answer: A)

Question 17

The rule of thumb for determining how much rent you can afford is that you should not spend more than a certain percentage of your after-tax income on rent and utilities.The appropriate percentage is

Accepted Answer

The appropriate percentage for rent and utilities should not exceed 25% of your after-tax income. This ensures that you have enough money left over for other important expenses like groceries, transportation, and savings. Spending more than 25% on rent can put a strain on your budget and make it difficult to save for emergencies or long-term goals.

Question 18

The Federal National Mortgage Corporation recommends than your housing expenses not exceed what percentage of your gross monthly income?

Accepted Answer

The Federal National Mortgage Corporation, commonly known as Fannie Mae, generally recommends that housing expenses, including mortgage payments, property taxes, and insurance, should not exceed 28% of a borrower's gross monthly income. This is known as the "28/36 rule". The rule also suggests that total debt payments should not exceed 36% of a borrower's gross monthly income. Exceeding these percentages can lead to financial strain and difficulty in making mortgage payments.

Question 19

The Housing Affordability index is based on the

Accepted Answer

The Housing Affordability index measures the ability of the median income family to purchase the median priced home. It takes into account the median home price, median family income, and prevailing mortgage rates to determine how affordable homes are for the typical family.

Question 20

A review of the Housing Affordability Index indicates that since the early 1990s,housing affordability has

Accepted Answer

The Housing Affordability Index had an overall upward trend until about 2004, after which it began to decline.

Quiz 8: Housing: the Cost of Shelter

Which of the following statements is not true of mobile housing?

Which of the following statements is not true of cooperative housing?

A single taxpayer may

The Federal National Mortgage Corporation recommends that you total monthly debt payments,including housing expenses,not exceed

Which of the following statements concerning the housing market is false?

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you itemize deductions.Home ownership will reduce your tax payments by about how much?

Which of the following statements concerning home ownership is false?

Which of the following statements is not true of condominium housing?

A decline in the Housing Affordability Index indicates that housing

One rule of thumb mentioned in the text is that your home purchase should price equal about

Recent problems in the subprime mortgage have been attributed to which of the following?

The subprime mortgage market consists of

Which of the following statements is not true of condominium housing?

If your affordable home mortgage is $100,000 and you need a 20% down payment,your affordable home purchase price is

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you do not itemize deductions.Home ownership will reduce your tax payments by about how much?

Your annual mortgage payments are $10,000 of which $8,000 represents interest payments,your marginal tax rate is about 30%,and you itemize deductions.Your mortgage payments after taxes are how much?

The rule of thumb for determining how much rent you can afford is that you should not spend more than a certain percentage of your after-tax income on rent and utilities.The appropriate percentage is

The Federal National Mortgage Corporation recommends than your housing expenses not exceed what percentage of your gross monthly income?

The Housing Affordability index is based on the

A review of the Housing Affordability Index indicates that since the early 1990s,housing affordability has