Question 1

Annual property taxes for homes are usually

Accepted Answer

A)  less than 0.5% of the home value. 
B)  0.5% to 1% of the home value. 
C)  1% to 2% of the home value. 
D)  greater than 2% of the home value. 
A)  less than 0.5% of the home value. 
B)  0.5% to 1% of the home value. 
C)  1% to 2% of the home value. 
D)  greater than 2% of the home value.

Question 2

Proximity to schools can increase home values, while increased distance from schools often lowers home values.

Accepted Answer

A) True 
 B)False

Question 3

A ________ is responsible for determining the value of the home as part of the loan process.

Accepted Answer

A)  banker 
B)  loan officer 
C)  real estate appraiser 
D)  real estate agent 
A)  banker 
B)  loan officer 
C)  real estate appraiser 
D)  real estate agent

Question 4

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Accepted Answer

A)  insurance account. 
B)  appraisal account. 
C)  escrow account. 
D)  default prevention account. 
A)  insurance account. 
B)  appraisal account. 
C)  escrow account. 
D)  default prevention account.

Question 5

Which of the following is not true?

Accepted Answer

A)  A conventional mortgage requires a 10-20% down payment. 
B)  With government-backed loans, the government insures the loan in the event of default. 
C)  Veterans Administration mortgages are extended to most first-time homebuyers. 
D)  Government-backed mortgages may require lower down payments than conventional mortgages. 
A)  A conventional mortgage requires a 10-20% down payment. 
B)  With government-backed loans, the government insures the loan in the event of default. 
C)  Veterans Administration mortgages are extended to most first-time homebuyers. 
D)  Government-backed mortgages may require lower down payments than conventional mortgages.

Question 6

The first step in the home-buying process should be to

Accepted Answer

A)  identify the specific home you want to purchase. 
B)  determine a realistic price range of homes you can afford. 
C)  compare the cost of buying to renting. 
D)  find a good real estate broker. 
A)  identify the specific home you want to purchase. 
B)  determine a realistic price range of homes you can afford. 
C)  compare the cost of buying to renting. 
D)  find a good real estate broker.

Question 7

Renting is almost always a better financial option since owning a home has so many costs including maintenance, insurance, and taxes.

Accepted Answer

A) True 
 B)False

Question 8

On a fixed rate mortgage, the monthly

Accepted Answer

A)  payment remains constant and the interest rate fluctuates. 
B)  payment remains constant and interest rate stays the same. 
C)  payment varies and the interest rate varies. 
D)  payment remains constant until the balloon payment. 
A)  payment remains constant and the interest rate fluctuates. 
B)  payment remains constant and interest rate stays the same. 
C)  payment varies and the interest rate varies. 
D)  payment remains constant until the balloon payment.

Question 9

An advantage of using online real estate services is that

Accepted Answer

A)  you have easier access to qualified real estate agents. 
B)  the commissions and fees are often less than those charged by traditional full-service real estate agents. 
C)  your chances of selling a house are about 50% greater. 
D)  you will get a higher price for houses sold or pay lower prices for houses bought. 
A)  you have easier access to qualified real estate agents. 
B)  the commissions and fees are often less than those charged by traditional full-service real estate agents. 
C)  your chances of selling a house are about 50% greater. 
D)  you will get a higher price for houses sold or pay lower prices for houses bought.

Question 10

The type of home that probably would require the lowest maintenance is a(n)

Accepted Answer

A)  large home. 
B)  older home. 
C)  home built by a well-known construction company. 
D)  home with a large yard. 
A)  large home. 
B)  older home. 
C)  home built by a well-known construction company. 
D)  home with a large yard.

Question 11

Which of the following should not be considered when selecting a condominium?

Accepted Answer

A)  Availability of companies in the area that you can call on to perform maintenance and repair services on your unit 
B)  Taxes 
C)  Resale value 
D)  Association dues 
A)  Availability of companies in the area that you can call on to perform maintenance and repair services on your unit 
B)  Taxes 
C)  Resale value 
D)  Association dues

Question 12

Use the following two columns of items to answer the matching questions below:
-Points
A)title search and insurance, appraisal fee, and other costs
B)fees that are a percentage of the purchase price and are paid by the borrower to the lender to obtain a reduction in the interest rate

Accepted Answer

The answer of Use the following two columns of items...

Question 13

Real estate brokers usually offer good advice, but since they have a vested interest in you buying from them, you should also factor in your own judgment.

Accepted Answer

A) True 
 B)False

Question 14

When purchasing a home, which of the following costs will you not incur?

Accepted Answer

A)  Loan origination fee 
B)  Real estate agent's commission 
C)  Application fee 
D)  Appraisal fee 
A)  Loan origination fee 
B)  Real estate agent's commission 
C)  Application fee 
D)  Appraisal fee

Question 15

Since most of the problems have already been fixed, older homes usually have lower maintenance expense than newer homes.

Accepted Answer

A) True 
 B)False

Question 16

By shopping around, a homeowner can probably avoid which of the following fees?

Accepted Answer

A)  Title search 
B)  Title insurance 
C)  Appraisal fee 
D)  Loan origination fee 
A)  Title search 
B)  Title insurance 
C)  Appraisal fee 
D)  Loan origination fee

Question 17

A good way to estimate the market value of a home is to multiply the number of square feet by the average price per square foot of similar homes in the area.

Accepted Answer

A) True 
 B)False

Question 18

A point is a flat fee of $500 for each multiple of $100,000 that you finance on a new home.

Accepted Answer

A) True 
 B)False

Question 19

Since there is no limit on how much and how fast adjustable rate mortgages (ARMs) can increase, most homeowners are afraid to take out this kind of loan.

Accepted Answer

A) True 
 B)False

Question 20

All the following information, except ________, can be found on a variety of Web sites about mortgages.

Accepted Answer

A)  projected rate increases 
B)  loan rates, length of loan, and principal 
C)  loan applications 
D)  background on different mortgage companies 
A)  projected rate increases 
B)  loan rates, length of loan, and principal 
C)  loan applications 
D)  background on different mortgage companies

Exam 10: Purchasing and Financing a Home

Annual property taxes for homes are usually

Proximity to schools can increase home values, while increased distance from schools often lowers home values.

A ________ is responsible for determining the value of the home as part of the loan process.

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Which of the following is not true?

The first step in the home-buying process should be to

Renting is almost always a better financial option since owning a home has so many costs including maintenance, insurance, and taxes.

On a fixed rate mortgage, the monthly

An advantage of using online real estate services is that

The type of home that probably would require the lowest maintenance is a(n)

Which of the following should not be considered when selecting a condominium?

Use the following two columns of items to answer the matching questions below: -Points A)title search and insurance, appraisal fee, and other costs B)fees that are a percentage of the purchase price and are paid by the borrower to the lender to obtain a reduction in the interest rate

Real estate brokers usually offer good advice, but since they have a vested interest in you buying from them, you should also factor in your own judgment.

When purchasing a home, which of the following costs will you not incur?

Since most of the problems have already been fixed, older homes usually have lower maintenance expense than newer homes.

By shopping around, a homeowner can probably avoid which of the following fees?

A good way to estimate the market value of a home is to multiply the number of square feet by the average price per square foot of similar homes in the area.

A point is a flat fee of $500 for each multiple of $100,000 that you finance on a new home.

Since there is no limit on how much and how fast adjustable rate mortgages (ARMs) can increase, most homeowners are afraid to take out this kind of loan.

All the following information, except ________, can be found on a variety of Web sites about mortgages.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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