Exam 5: Making Automobile and Housing Decisions

A money factor of 0.00360 on a lease is equivalent to an annual percentage rate of

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -You should discuss your plans for financing a vehicle with the sales person [before | after] settling on the price of the new car.

The largest single investment you will undertake in your lifetime will probably be the purchase of a house.

The money factor on an auto lease is similar to the interest rate on a loan.

You should secure the trade in value of your current automobile before you start negotiating the final price on the car you are purchasing.

Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for.The lender requires total installment loan payments not exceed 35% of gross monthly income.Based on Barb and Bob's financial data below,what is the maximum monthly mortgage payment for which they can qualify?

The job of a mortgage banker is to locate conventional loans for clients.

Your mortgage payment is $1,500 per month.Of this amount,insurance is $50,property taxes are $200,and interest is about $1,100.Assuming you have other itemized deductions that already exceed your standard deduction and that you are in the 31% marginal tax bracket,what is the reduction in your tax liability as a result of owning a home with this mortgage.(Show all work. )

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -From a financial point of view,you [should | should not] make insurance and tax payments along with your mortgage payment.

Adjustable-rate mortgages with monthly payment caps can lead to negative amortization.

Condominium and Townhome owners can deduct real estate taxes and mortgage interest on their federal income taxes but co-op owners cannot take these deductions.

In order to find out all of the homes that are available for sale in a particular area you should consult

Less rapid depreciation is one advantage of buying a new car rather than a used car.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The purchase price of the house you are buying is $140,000.A loan-to-value ratio of 80% will require a down payment of [$34,000 | $28,000].

The majority of each monthly payment at the beginning of the loan goes to pay

The financing rate on the car you are leasing is called the

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -If you drive a lot of miles each year rather than a few,the operating cost per mile will [increase | stay the same].

Janice wants to buy a new car.The cost is $30,000.At the end of six years,the car is expected to be worth 20% of the original price.(Show all work. ) a. What will the car value be in six years? b. What is the annual depreciation on the car?

When negotiating a lease agreement,experts recommend

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -If you qualify,you might be able to buy a home with no down payment with [an FHA | a VA] loan.