Question 1

Most individuals spend ________ of their monthly income on housing.

Accepted Answer

The general recommendation is that individuals should spend approximately 30% to 50% of their monthly income on housing. This range is often cited by financial advisors and housing experts as a guideline for budgeting to ensure that individuals have enough money left over for other expenses.

Question 2

________ is a special type of loan that is secured by real property.

Accepted Answer

A mortgage is a loan specifically designed where the real property is used as collateral to secure the loan.

Question 3

________ refers to allowing someone else, not originally on the lease, to live in the home and pay rent.

Accepted Answer

Subletting refers to the practice of a tenant letting someone else, who is not originally on the lease, live in the rental property and pay rent.

Question 4

Which ratio is the sum of monthly housing payments plus all other monthly debt payments divided by total monthly income?

Accepted Answer

The answer of Which ratio is the sum of monthly...

Question 5

Shiloh just graduated from college. She accepted a position with a firm earning $961.54 per week. Using HUD guidelines, what is the maximum Shiloh should pay for rent on a monthly basis assuming she works 52 weeks per year?

Accepted Answer

HUD guidelines suggest that housing should not exceed 30% of a person's gross income. Shiloh's monthly income is $961.54 * 52 / 12 = $4,166.15. 30% of $4,166.15 is approximately $1,250.

Question 6

A(n) ________ is a legal document that outlines the terms of the rental agreement.

Accepted Answer

A lease is specifically a legal document that outlines the terms of a rental agreement between a landlord and tenant, detailing the duration, rent amount, and other conditions of the tenancy.

Question 7

According to HUD, if your pretax income is $4,000, you should pay no more than ________ on rent.

Accepted Answer

According to HUD (U.S. Department of Housing and Urban Development), individuals should not spend more than 30% of their pretax income on rent. For a pretax income of $4,000, 30% equals $1,200.

Question 8

A ________ allows the homeowner to sell the house for less than what is owed on the mortgage but does not require the homeowner to pay the difference to the lender.

Accepted Answer

A short sale is when a homeowner sells their property for less than the amount due on the mortgage, with the lender's permission, and the lender agrees to accept the proceeds from the sale instead of pursuing the borrower for the remaining debt.

Question 9

What is the process where, in the event the homeowner does not make monthly mortgage payments, the lender can take possession of the house and sell it to another buyer?

Accepted Answer

Foreclosing is the legal process by which a lender takes possession of a property due to the homeowner's failure to make mortgage payments.

Question 10

Marty just graduated from college. She accepted a position with a firm at an annual salary of $35,000. Using HUD guidelines, what is the maximum Marty should pay for rent on a monthly basis?

Accepted Answer

HUD (Housing and Urban Development) guidelines suggest that housing should not exceed 30% of a person's income. Marty's annual salary is $35,000, so 30% of this is $10,500 per year. Dividing $10,500 by 12 months gives $875 per month.

Question 11

Elijah just graduated from college. He accepted a position with a firm at an annual salary of $45,000. Using HUD guidelines, what is the maximum Elijah should pay for rent on a monthly basis?

Accepted Answer

HUD (Housing and Urban Development) guidelines suggest that housing should not exceed 30% of a person's income. Elijah's monthly income is $45,000 / 12 = $3,750. 30% of $3,750 is $1,125.

Question 12

A(n) ________ deposit is a fee that may be required when you sign a rental lease.

Accepted Answer

All of these deposits can be required when signing a rental lease. An application deposit is often required to process the rental application, a security deposit can be required as a safeguard against damage, and a pet deposit is required if the tenant has pets.

Question 13

How much is an average pet deposit?

Accepted Answer

The answer of How much is an average pet deposit?
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Question 14

Which of the following is a benefit of buying versus renting a house?

Accepted Answer

Buying a house provides long-term stability through ownership and potential property value appreciation, unlike renting which is more flexible but offers less stability.

Question 15

What is the maximum percentage of your monthly income that should be spent on housing expenses according to the FHA?

Accepted Answer

The Federal Housing Administration (FHA) suggests that a maximum of 31% of your monthly income should be spent on housing expenses.

Question 16

The person or company that owns the property you hope to rent is referred to as the

Accepted Answer

The person or company that owns the property you hope to rent is referred to as the landlord. They are responsible for renting out the property to tenants.

Question 17

The cost for renter's insurance is typically about ________ per year.

Accepted Answer

Renter's insurance is generally affordable, with the average cost being around $125 to $200 per year, making $125 a reasonable estimate.

Question 18

HUD suggests that you should spend no more than ________ of your pretax income on rent.

Accepted Answer

HUD (The U.S. Department of Housing and Urban Development) suggests that you should spend no more than 30% of your pretax income on rent to maintain affordability.

Question 19

Mia just graduated from college. She accepted a position with a firm earning $50 per hour. She is expected to work 1,900 hours in a year. Using HUD guidelines, what is the maximum Mia should pay for rent on a monthly basis?

Accepted Answer

The answer of Mia just graduated from college. She accepted...

Question 20

Landlords may encourage a renter to spend ________ of his or her gross monthly income on rent.

Accepted Answer

The answer of Landlords may encourage a renter to spend...

Quiz 6: Loans and Housing Decisions