Question 1

A market analysis is not

Accepted Answer

A)  an estimate of the price of a home. 
B)  a guarantee of the price you will receive when selling a home. 
C)  based on similar homes in the area. 
D)  determined by multiplying the number of square feet in the home by the average price per square foot of comparable homes. 
A)  an estimate of the price of a home. 
B)  a guarantee of the price you will receive when selling a home. 
C)  based on similar homes in the area. 
D)  determined by multiplying the number of square feet in the home by the average price per square foot of comparable homes.

Question 2

A mortgage where the interest owed changes in response to movements in a specific market-determined interest rate is called a(n)

Accepted Answer

A)  HELOC. 
B)  fixed-rate mortgage. 
C)  adjustable-rate mortgage. 
D)  second mortgage. 
A)  HELOC. 
B)  fixed-rate mortgage. 
C)  adjustable-rate mortgage. 
D)  second mortgage.

Question 3

Which of the following is not true concerning adjustable-rate mortgages (ARMs)?

Accepted Answer

A)  There is usually a limit on how much a rate may increase per year. 
B)  There is usually no limit on how much a rate may increase per year. 
C)  There is usually a limit on how much a rate may increase over the life of the loan. 
D)  The maximum increase over the life of the loan is usually 5%. 
A)  There is usually a limit on how much a rate may increase per year. 
B)  There is usually no limit on how much a rate may increase per year. 
C)  There is usually a limit on how much a rate may increase over the life of the loan. 
D)  The maximum increase over the life of the loan is usually 5%.

Question 4

If you think interest rates will rise in the near future, you should seek an adjustable rate mortgage (ARM).

Accepted Answer

A) True 
 B)False

Question 5

One disadvantage of a neighborhood with a homeowner's association is that

Accepted Answer

A)  the association covenants can restrict how you decorate the outside of your home as well as what you store outside on the property. 
B)  the association often chooses the trash and other common service companies for all homeowners. 
C)  the association maintains the common area so homeowners do not have to. 
D)  the association pays for all homeowner's insurance. 
A)  the association covenants can restrict how you decorate the outside of your home as well as what you store outside on the property. 
B)  the association often chooses the trash and other common service companies for all homeowners. 
C)  the association maintains the common area so homeowners do not have to. 
D)  the association pays for all homeowner's insurance.

Question 6

Which of the following is true?

Accepted Answer

A)  Loan origination fees are around 10-20 percent. 
B)  Loan application fees range from $100 to $500. 
C)  Points are $100-$200 per $1,000 of the home's value. 
D)  Appraisal costs range between 15% and 20% of the value of the home. 
A)  Loan origination fees are around 10-20 percent. 
B)  Loan application fees range from $100 to $500. 
C)  Points are $100-$200 per $1,000 of the home's value. 
D)  Appraisal costs range between 15% and 20% of the value of the home.

Question 7

List four key components of closing costs.

Accepted Answer

Any combination of the followi

Question 8

Making extra mortgage payments does which of the following?

Accepted Answer

A)  Increases the total amount of interest paid 
B)  Reduces the length of the loan 
C)  Decreases net worth 
D)  Increases the points charged 
A)  Increases the total amount of interest paid 
B)  Reduces the length of the loan 
C)  Decreases net worth 
D)  Increases the points charged

Question 9

In negotiating for the purchase of a home, which of the following is unlikely to be included in the negotiating process?

Accepted Answer

A)  Possession date 
B)  Repairs that are to be made 
C)  Purchase price 
D)  Cost of moving the buyer's possessions into the home 
A)  Possession date 
B)  Repairs that are to be made 
C)  Purchase price 
D)  Cost of moving the buyer's possessions into the home

Question 10

Before you buy a house, you should conduct a(n) ________ to determine if the price is comparable to similar houses in the area.

Accepted Answer

The answer of Before you buy a house, you should...

Question 11

The initial rate on an ARM will typically be

Accepted Answer

A)  relatively low, which benefits the homeowner. 
B)  relatively high to allow the bank to recoup costs. 
C)  about the same as a fixed-rate loan of the same maturity. 
D)  set by state law. 
A)  relatively low, which benefits the homeowner. 
B)  relatively high to allow the bank to recoup costs. 
C)  about the same as a fixed-rate loan of the same maturity. 
D)  set by state law.

Question 12

Which of the following is true of private mortgage insurance?

Accepted Answer

A)  It generally is required if the borrower makes a down payment of less than 20%. 
B)  It costs $20 to $25 per year. 
C)  It protects the borrower in the event that the lender goes bankrupt. 
D)  It is another name for title insurance. 
A)  It generally is required if the borrower makes a down payment of less than 20%. 
B)  It costs $20 to $25 per year. 
C)  It protects the borrower in the event that the lender goes bankrupt. 
D)  It is another name for title insurance.

Question 13

Greg and Kathy are considering purchasing a home requiring an $85,000 mortgage. The payment on a 30-year mortgage for this amount is $605. The payment for a 15-year mortgage is $752. What is the additional amount of interest paid on the 30-year mortgage?

Accepted Answer

A)  $82,440 
B)  $52,920 
C)  $135,360 
D)  $26,460 
A)  $82,440 
B)  $52,920 
C)  $135,360 
D)  $26,460

Question 14

Over the life of a mortgage, the payment to principal ________ and the portion to interest expense ________.

Accepted Answer

A)  increases; increases 
B)  decreases; increases 
C)  increases; decreases 
D)  decreases; decreases 
A)  increases; increases 
B)  decreases; increases 
C)  increases; decreases 
D)  decreases; decreases

Question 15

If the interest rate on your home mortgage will not change over the life of the loan you have a(n) ________.

Accepted Answer

The answer of If the interest rate on your home...

Question 16

On the purchase of a home, one "point" is equal to

Accepted Answer

A)  $100. 
B)  $1,000. 
C)  1% of the amount being financed. 
D)  1% of the purchase price. 
A)  $100. 
B)  $1,000. 
C)  1% of the amount being financed. 
D)  1% of the purchase price.

Question 17

Before buying a house you should do the following.

Accepted Answer

A)  Have your real estate agent complete a market price analysis for comparable properties 
B)  Have a certified home inspector complete an inspection of the home inside and out 
C)  Check your budget to make sure the home including all associated costs is affordable 
D)  A, B and C are all important. 
A)  Have your real estate agent complete a market price analysis for comparable properties 
B)  Have a certified home inspector complete an inspection of the home inside and out 
C)  Check your budget to make sure the home including all associated costs is affordable 
D)  A, B and C are all important.

Question 18

As a result of the financial crisis of 2008-2009, some financial institutions accepted a ________ arrangement in which the lender accepted the proceeds of the sale of a home as full payment on the debt owed even though the proceeds were less than the debt owed.

Accepted Answer

A)  mortgage modification 
B)  foreclosure 
C)  refinancing 
D)  short sale 
A)  mortgage modification 
B)  foreclosure 
C)  refinancing 
D)  short sale

Question 19

Refinancing a home is usually worthwhile when

Accepted Answer

A)  interest rates have risen. 
B)  you can increase your monthly payment considerably. 
C)  you will live in your home long enough to recoup the closing costs. 
D)  you plan on moving in less than a year. 
A)  interest rates have risen. 
B)  you can increase your monthly payment considerably. 
C)  you will live in your home long enough to recoup the closing costs. 
D)  you plan on moving in less than a year.

Question 20

An amortization schedule shows all but the

Accepted Answer

A)  principal portion of the payment. 
B)  interest portion of the payment. 
C)  increase in market value. 
D)  beginning and ending balances. 
A)  principal portion of the payment. 
B)  interest portion of the payment. 
C)  increase in market value. 
D)  beginning and ending balances.

Exam 10: Purchasing and Financing a Home

A market analysis is not

A mortgage where the interest owed changes in response to movements in a specific market-determined interest rate is called a(n)

Which of the following is not true concerning adjustable-rate mortgages (ARMs)?

If you think interest rates will rise in the near future, you should seek an adjustable rate mortgage (ARM).

One disadvantage of a neighborhood with a homeowner's association is that

Which of the following is true?

List four key components of closing costs.

Making extra mortgage payments does which of the following?

In negotiating for the purchase of a home, which of the following is unlikely to be included in the negotiating process?

Before you buy a house, you should conduct a(n) ________ to determine if the price is comparable to similar houses in the area.

The initial rate on an ARM will typically be

Which of the following is true of private mortgage insurance?

Greg and Kathy are considering purchasing a home requiring an $85,000 mortgage. The payment on a 30-year mortgage for this amount is $605. The payment for a 15-year mortgage is $752. What is the additional amount of interest paid on the 30-year mortgage?

Over the life of a mortgage, the payment to principal ________ and the portion to interest expense ________.

If the interest rate on your home mortgage will not change over the life of the loan you have a(n) ________.

On the purchase of a home, one "point" is equal to

Before buying a house you should do the following.

As a result of the financial crisis of 2008-2009, some financial institutions accepted a ________ arrangement in which the lender accepted the proceeds of the sale of a home as full payment on the debt owed even though the proceeds were less than the debt owed.

Refinancing a home is usually worthwhile when

An amortization schedule shows all but the

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

Filters

Over the life of a mortgage, the payment to principal and the portion to interest expense .