Question 1

Which of the following statements about interest-only mortgages is not true?

Accepted Answer

A)  Interest-only mortgages cannot be Qualified Mortgages under The Consumer Financial Protection Bureau's rules. 
B)  Mortgage payments may increase abruptly. 
C)  Interest-only mortgages allow the borrower to pay only interest for the life of the mortgage. 
D)  Interest-only mortgages were popular before the financial crisis. 
A)  Interest-only mortgages cannot be Qualified Mortgages under The Consumer Financial Protection Bureau's rules. 
B)  Mortgage payments may increase abruptly. 
C)  Interest-only mortgages allow the borrower to pay only interest for the life of the mortgage. 
D)  Interest-only mortgages were popular before the financial crisis.

Question 2

Nathaniel and Kimberly want to make an offer on a 2,200 square foot home that is priced at $212,000. They research other home prices and find the following information: a 2,400 square foot home sold for $220,000; a 1,800 square foot home sold for $168,000; a 2,000 square foot home sold for $185,000. Based on your analysis, what reasonable offer should Nathaniel and Kimberly make on the house? (Round all computations to the nearest dollar.)

Accepted Answer

A)  $212,000 
B)  $200,400 
C)  $204,600 
D)  $194,000 
A)  $212,000 
B)  $200,400 
C)  $204,600 
D)  $194,000

Question 3

The interest rate on an ARM may be adjusted

Accepted Answer

A)  once per year. 
B)  every three years. 
C)  every five years. 
D)  Any of the above depending on the terms of the loan. 
A)  once per year. 
B)  every three years. 
C)  every five years. 
D)  Any of the above depending on the terms of the loan.

Question 4

Online real estate services are more convenient, but usually charge higher commissions than traditional full-service real estate companies.

Accepted Answer

A) True 
 B)False

Question 5

You are considering the purchase of a 2,300 square foot house that is being offered for $238,500. After researching recent home sales in the area, you find three that are comparable. The first was a 2,500 square foot home that sold for $225,000, the second was a 2,200 square foot home that sold for $200,000 and the third was a 2,000 square foot home that sold for $178,000. Based on your analysis, what would be a reasonable offer on the house? (Round all computations to the nearest dollar.)

Accepted Answer

A)  $210,000 
B)  $207,000 
C)  $205,000 
D)  $201,000 
A)  $210,000 
B)  $207,000 
C)  $205,000 
D)  $201,000

Question 6

The total cost of owning a home versus renting is calculated by

Accepted Answer

A)  adding up the repair and maintenance expenses associated with the home. 
B)  subtracting the tax savings from the mortgage interest expense and taxes. 
C)  subtracting the expected value of the equity of the home at the end of the period. 
D)  All of the above. 
A)  adding up the repair and maintenance expenses associated with the home. 
B)  subtracting the tax savings from the mortgage interest expense and taxes. 
C)  subtracting the expected value of the equity of the home at the end of the period. 
D)  All of the above.

Question 7

Your home value is likely to be higher with all of the following, except

Accepted Answer

A)  being close to a school. 
B)  having a convenient location. 
C)  being in an area that has just been zoned for industrial use. 
D)  being in an area where a large retail business has just moved in. 
A)  being close to a school. 
B)  having a convenient location. 
C)  being in an area that has just been zoned for industrial use. 
D)  being in an area where a large retail business has just moved in.

Question 8

Use the following two columns of items to answer the matching questions below:
-fixed-rate mortgage
A)schedule of payments, interest expense, and balance
B)fixed interest rate until maturity

Accepted Answer

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

Question 9

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

Accepted Answer

A)  Five months 
B)  Seven months 
C)  Eighteen months 
D)  The maturity of the loan 
A)  Five months 
B)  Seven months 
C)  Eighteen months 
D)  The maturity of the loan

Question 10

A sales contract stipulates not only the price offered for a home, but also the repairs to be completed and the move-in date requested by the buyer.

Accepted Answer

A) True 
 B)False

Question 11

If a person chooses to purchase a more expensive home, he or she may have to cut expenses in other areas such as entertainment.

Accepted Answer

A) True 
 B)False

Question 12

Most home purchases are made initially

Accepted Answer

A)  with payments by personal check. 
B)  with a 10 to 20% down payment and a mortgage. 
C)  with a 5% down payment. 
D)  with no down payment. 
A)  with payments by personal check. 
B)  with a 10 to 20% down payment and a mortgage. 
C)  with a 5% down payment. 
D)  with no down payment.

Question 13

For a conventional mortgage, a lender typically requires a down payment of 10% to 20% of the home's selling price.

Accepted Answer

A) True 
 B)False

Question 14

When a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a(n) ________ mortgage.

Accepted Answer

A)  VA 
B)  subprime 
C)  prime 
D)  FHA 
A)  VA 
B)  subprime 
C)  prime 
D)  FHA

Question 15

When obtaining a mortgage, you should

Accepted Answer

A)  apply for the maximum amount you can afford, since the house will be an appreciating asset. 
B)  let a real estate agent or some other expert choose the type and length of mortgage you will need. 
C)  maintain some funds for liquidity purposes to cover unanticipated bills. 
D)  be very conservative and apply only for a mortgage amount you can pay off within 10 years. 
A)  apply for the maximum amount you can afford, since the house will be an appreciating asset. 
B)  let a real estate agent or some other expert choose the type and length of mortgage you will need. 
C)  maintain some funds for liquidity purposes to cover unanticipated bills. 
D)  be very conservative and apply only for a mortgage amount you can pay off within 10 years.

Question 16

The term ARM stands for

Accepted Answer

A)  alliance rated mortgage. 
B)  adjustable-rate mortgage. 
C)  American Realty Mortgage. 
D)  American rated mortgage. 
A)  alliance rated mortgage. 
B)  adjustable-rate mortgage. 
C)  American Realty Mortgage. 
D)  American rated mortgage.

Question 17

You should consider the school system near a home only if you have or are likely to have school-aged children.

Accepted Answer

A) True 
 B)False

Question 18

Describe how a mortgage and other related expenses affect a personal budget, income statement, and balance sheet.

Accepted Answer

Mortgage expense and taxes reduce your w

Question 19

Adjustable-rate mortgages are riskier than fixed-rate mortgages. However, they may be useful when the interest rate is expected to ________ in the future.

Accepted Answer

A)  increase 
B)  decrease 
C)  remain stable 
D)  None of the above 
A)  increase 
B)  decrease 
C)  remain stable 
D)  None of the above

Question 20

Which of the following does not reflect the impact of a strong economy on home prices?

Accepted Answer

A)  There is a strong desire to purchase homes. 
B)  People are more confident that their jobs are secure. 
C)  People spend their money more conservatively. 
D)  It's easier to obtain financing. 
A)  There is a strong desire to purchase homes. 
B)  People are more confident that their jobs are secure. 
C)  People spend their money more conservatively. 
D)  It's easier to obtain financing.

Which of the following statements about interest-only mortgages is not true?

The interest rate on an ARM may be adjusted

Online real estate services are more convenient, but usually charge higher commissions than traditional full-service real estate companies.

The total cost of owning a home versus renting is calculated by

Your home value is likely to be higher with all of the following, except

Use the following two columns of items to answer the matching questions below: -fixed-rate mortgage A)schedule of payments, interest expense, and balance B)fixed interest rate until maturity

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

A sales contract stipulates not only the price offered for a home, but also the repairs to be completed and the move-in date requested by the buyer.

If a person chooses to purchase a more expensive home, he or she may have to cut expenses in other areas such as entertainment.

Most home purchases are made initially

For a conventional mortgage, a lender typically requires a down payment of 10% to 20% of the home's selling price.

When a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a(n) ________ mortgage.

When obtaining a mortgage, you should

The term ARM stands for

You should consider the school system near a home only if you have or are likely to have school-aged children.

Describe how a mortgage and other related expenses affect a personal budget, income statement, and balance sheet.

Adjustable-rate mortgages are riskier than fixed-rate mortgages. However, they may be useful when the interest rate is expected to ________ in the future.

Which of the following does not reflect the impact of a strong economy on home prices?

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

Exam 10: Purchasing and Financing a Home

Which of the following statements about interest-only mortgages is not true?

The interest rate on an ARM may be adjusted

Online real estate services are more convenient, but usually charge higher commissions than traditional full-service real estate companies.

The total cost of owning a home versus renting is calculated by

Your home value is likely to be higher with all of the following, except

Use the following two columns of items to answer the matching questions below: -fixed-rate mortgage A)schedule of payments, interest expense, and balance B)fixed interest rate until maturity

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

A sales contract stipulates not only the price offered for a home, but also the repairs to be completed and the move-in date requested by the buyer.

If a person chooses to purchase a more expensive home, he or she may have to cut expenses in other areas such as entertainment.

Most home purchases are made initially

For a conventional mortgage, a lender typically requires a down payment of 10% to 20% of the home's selling price.

When a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a(n) ________ mortgage.

When obtaining a mortgage, you should

The term ARM stands for

You should consider the school system near a home only if you have or are likely to have school-aged children.

Describe how a mortgage and other related expenses affect a personal budget, income statement, and balance sheet.

Adjustable-rate mortgages are riskier than fixed-rate mortgages. However, they may be useful when the interest rate is expected to ________ in the future.

Which of the following does not reflect the impact of a strong economy on home prices?

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