Question 1

The market price of a house is $125,000, and the home buyer borrows $100,000. Two points are equal to $2,000.

Accepted Answer

A) True 
 B)False  True

Question 2

Judy has $2,000 for a down payment on a vehicle and she can afford monthly payments of $400. If lenders are currently offering 6% interest on 5-year loans, what is the maximum price Judy can pay for a vehicle?

Accepted Answer

In order to calculate how much Judy can afford on her vehicle, first calculate the present value of the loan for a period of 5 years. 
 To calculate the PV, consider the following arguments: 
 PMT = $400, I = 6% ÷ 12 months = 0.5%, N = 5 years × 12 months = 60 months 
 PV= $20,690.22 
 Judy can afford a total of $22,690 for a vehicle. It is the sum of $2,000 as down payment and $20,690 over a period of 5 years to purchase a new car. See 5-1: Buying an Automobile.

Question 3

If the maximum loan-to-value ratio that a lender will accept on a house costing $100,000 is 90%, then the borrower must make a:

Accepted Answer

A) minimum down payment of $10,000 plus closing costs. 
B) minimum down payment of $10,000 including closing costs . 
C) maximum down payment of $10,000 including closing costs and mortgage points. 
D) maximum down payment of $10,000. 
E) minimum down payment of $90,000 including closing costs. 
A) minimum down payment of $10,000 plus closing costs. 
B) minimum down payment of $10,000 including closing costs . 
C) maximum down payment of $10,000 including closing costs and mortgage points. 
D) maximum down payment of $10,000. 
E) minimum down payment of $90,000 including closing costs. A

Question 4

You made a $900 mortgage payment. The interest of $925 on the mortgage for this month leads to an increase in the principal balance. You have:

Accepted Answer

A) experienced a negative amortization. 
B) signed up for a conventional mortgage. 
C) refinanced your loan. 
D) taken a fixed-rate mortgage. 
E) accepted a buydown. 
A) experienced a negative amortization. 
B) signed up for a conventional mortgage. 
C) refinanced your loan. 
D) taken a fixed-rate mortgage. 
E) accepted a buydown.

Question 5

When you lease your apartment from a nonprofit corporation that owns the building and you own a share of the nonprofit corporation, you own a:

Accepted Answer

A) single-family home. 
B) cooperative apartment. 
C) condominium. 
D) row house. 
E) mobile home. 
A) single-family home. 
B) cooperative apartment. 
C) condominium. 
D) row house. 
E) mobile home.

Question 6

Fredrick purchased a property worth $150,000 on mortgage. He paid $30,000 as a down payment on this property. However, a recent slump in real estate prices forced Fredrick to sell the property for $115,000 only 2 months later. This sale is termed a(n):

Accepted Answer

A) real estate declining equity. 
B) real estate short sale. 
C) fixed mortgage sale. 
D) shrinking principal sale. 
E) indexed equity. 
A) real estate declining equity. 
B) real estate short sale. 
C) fixed mortgage sale. 
D) shrinking principal sale. 
E) indexed equity.

Question 7

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round to the nearest dollar.)

Accepted Answer

A) $12,765 
B) $14,400 
C) $14,079 
D) $15,265 
E) $16,879 
A) $12,765 
B) $14,400 
C) $14,079 
D) $15,265 
E) $16,879

Question 8

_____ are the expenses that borrowers pay during the final step of a real estate purchase.

Accepted Answer

A) Amortization costs 
B) Closing costs 
C) Property taxes 
D) Insurance costs 
E) Mortgage interests 
A) Amortization costs 
B) Closing costs 
C) Property taxes 
D) Insurance costs 
E) Mortgage interests

Question 9

Earnest money is the sum of money the home buyer pledges with the:

Accepted Answer

A) lender to guarantee the purchase. 
B) seller to indicate the intent to purchase. 
C) realtor for finding the desired home within a preset budget. 
D) lender to originate the loan. 
E) financial institution to prequalify for a mortgage loan. 
A) lender to guarantee the purchase. 
B) seller to indicate the intent to purchase. 
C) realtor for finding the desired home within a preset budget. 
D) lender to originate the loan. 
E) financial institution to prequalify for a mortgage loan.

Question 10

The first step in the auto-buying process should be:

Accepted Answer

A) to test-drive several automobiles. 
B) to begin negotiations on various automobiles. 
C) to decide whether to trade in your used car or to sell it yourself. 
D) to consider alternative buying strategies. 
E) to analyze how much you can afford to spend on the car. 
A) to test-drive several automobiles. 
B) to begin negotiations on various automobiles. 
C) to decide whether to trade in your used car or to sell it yourself. 
D) to consider alternative buying strategies. 
E) to analyze how much you can afford to spend on the car.

Question 11

Kurt has $4,500 for a down payment and thinks he can afford monthly payments of $300. If Kurt can finance a vehicle with a 7%, 4-year loan from the automobile dealer, what is the maximum amount he can afford to spend on the car? (Round to the nearest dollar.)

Accepted Answer

A) $12,528 
B) $14,400 
C) $16,028 
D) $17,028 
E) $18,028 
A) $12,528 
B) $14,400 
C) $16,028 
D) $17,028 
E) $18,028

Question 12

Variable auto ownership costs are dependent on the:

Accepted Answer

A) driver's behavior. 
B) miles covered by the automobile. 
C) installment payments on a car loan. 
D) down payment. 
E) periodic renewals of vehicle registration. 
A) driver's behavior. 
B) miles covered by the automobile. 
C) installment payments on a car loan. 
D) down payment. 
E) periodic renewals of vehicle registration.

Question 13

Which of the following are tax deductible if you itemize deductions?

Accepted Answer

A) Mortgage principal, mortgage interest, property taxes, and homeowner's insurance 
B) Mortgage principal, mortgage interest, and property taxes 
C) Mortgage principal and mortgage interest 
D) Mortgage interest, property taxes, and homeowner's insurance 
E) Mortgage interest and property taxes 
A) Mortgage principal, mortgage interest, property taxes, and homeowner's insurance 
B) Mortgage principal, mortgage interest, and property taxes 
C) Mortgage principal and mortgage interest 
D) Mortgage interest, property taxes, and homeowner's insurance 
E) Mortgage interest and property taxes

Question 14

The real estate agent's commission is generally paid by the:

Accepted Answer

A) seller. 
B) buyer. 
C) mortgage bank. 
D) local multiple listing service provider. 
E) seller ' s financial institution. 
A) seller. 
B) buyer. 
C) mortgage bank. 
D) local multiple listing service provider. 
E) seller ' s financial institution.

Question 15

You recently bought a new home. You receive title to an individual unit and joint ownership of any common areas and facilities. You have purchased a:

Accepted Answer

A) single-family home. 
B) cooperative. 
C) condominium. 
D) row house. 
E) mobile home. 
A) single-family home. 
B) cooperative. 
C) condominium. 
D) row house. 
E) mobile home.

Question 16

Which of the following is a type of down payment that lowers the potential depreciation and therefore your monthly lease payments on a leased car?

Accepted Answer

A) Money factor 
B) Property depreciation cost 
C) Initial residual value 
D) Purchase option 
E) Capital cost reduction 
A) Money factor 
B) Property depreciation cost 
C) Initial residual value 
D) Purchase option 
E) Capital cost reduction

Question 17

Jana has $1,500 for a down payment and thinks she can afford monthly payments of $300. If she can finance a vehicle with a 7%, 4-year loan from a credit society, what is the maximum loan amount Jana can afford? (Round to the nearest dollar.)

Accepted Answer

A) $12,528 
B) $14,208 
C) $16,028 
D) $17,900 
E) $18,028 
A) $12,528 
B) $14,208 
C) $16,028 
D) $17,900 
E) $18,028

Question 18

A buydown refers to:

Accepted Answer

A) a mortgage that starts with unusually low payments that rise over several years to a fixed payment. 
B) financing made available by a builder or seller to a potential new-home buyer at well below market interest rates, often only for a short period. 
C) a fixed-rate mortgage with payments that increase over a specific period. 
D) a mortgage that requires the borrower to pay only interest; typically used to finance the purchase of more expensive properties. 
E) a loan on which payments that equal half the regular annual interest amount are made every 6 months. 
A) a mortgage that starts with unusually low payments that rise over several years to a fixed payment. 
B) financing made available by a builder or seller to a potential new-home buyer at well below market interest rates, often only for a short period. 
C) a fixed-rate mortgage with payments that increase over a specific period. 
D) a mortgage that requires the borrower to pay only interest; typically used to finance the purchase of more expensive properties. 
E) a loan on which payments that equal half the regular annual interest amount are made every 6 months.

Question 19

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

Accepted Answer

A) $1,400 
B) $1,208 
C) $1,502 
D) $850 
E) $500 
A) $1,400 
B) $1,208 
C) $1,502 
D) $850 
E) $500

Question 20

If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ because of the size of the down payment.

Accepted Answer

A) closing points 
B) a bond 
C) private mortgage insurance 
D) application fees 
E) homeowner's insurance 
A) closing points 
B) a bond 
C) private mortgage insurance 
D) application fees 
E) homeowner's insurance

The market price of a house is $125,000, and the home buyer borrows $100,000. Two points are equal to $2,000.

Judy has $2,000 for a down payment on a vehicle and she can afford monthly payments of $400. If lenders are currently offering 6% interest on 5-year loans, what is the maximum price Judy can pay for a vehicle?

If the maximum loan-to-value ratio that a lender will accept on a house costing $100,000 is 90%, then the borrower must make a:

You made a $900 mortgage payment. The interest of $925 on the mortgage for this month leads to an increase in the principal balance. You have:

When you lease your apartment from a nonprofit corporation that owns the building and you own a share of the nonprofit corporation, you own a:

Fredrick purchased a property worth $150,000 on mortgage. He paid $30,000 as a down payment on this property. However, a recent slump in real estate prices forced Fredrick to sell the property for $115,000 only 2 months later. This sale is termed a(n):

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round to the nearest dollar.)

_____ are the expenses that borrowers pay during the final step of a real estate purchase.

Earnest money is the sum of money the home buyer pledges with the:

The first step in the auto-buying process should be:

Kurt has $4,500 for a down payment and thinks he can afford monthly payments of $300. If Kurt can finance a vehicle with a 7%, 4-year loan from the automobile dealer, what is the maximum amount he can afford to spend on the car? (Round to the nearest dollar.)

Variable auto ownership costs are dependent on the:

Which of the following are tax deductible if you itemize deductions?

The real estate agent's commission is generally paid by the:

You recently bought a new home. You receive title to an individual unit and joint ownership of any common areas and facilities. You have purchased a:

Which of the following is a type of down payment that lowers the potential depreciation and therefore your monthly lease payments on a leased car?

Jana has $1,500 for a down payment and thinks she can afford monthly payments of $300. If she can finance a vehicle with a 7%, 4-year loan from a credit society, what is the maximum loan amount Jana can afford? (Round to the nearest dollar.)

A buydown refers to:

If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ because of the size of the down payment.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 5: Making Automobile and Housing Decisions

The market price of a house is $125,000, and the home buyer borrows $100,000. Two points are equal to $2,000.

Judy has $2,000 for a down payment on a vehicle and she can afford monthly payments of $400. If lenders are currently offering 6% interest on 5-year loans, what is the maximum price Judy can pay for a vehicle?

If the maximum loan-to-value ratio that a lender will accept on a house costing $100,000 is 90%, then the borrower must make a:

You made a $900 mortgage payment. The interest of $925 on the mortgage for this month leads to an increase in the principal balance. You have:

When you lease your apartment from a nonprofit corporation that owns the building and you own a share of the nonprofit corporation, you own a:

Fredrick purchased a property worth $150,000 on mortgage. He paid $30,000 as a down payment on this property. However, a recent slump in real estate prices forced Fredrick to sell the property for $115,000 only 2 months later. This sale is termed a(n):

Henry has $2,500 for a down payment and thinks he can afford monthly payments of $400. If he can finance a vehicle with an 8%, 3-year loan from a local bank, what is the maximum amount Henry can spend on the car? (Round to the nearest dollar.)

_____ are the expenses that borrowers pay during the final step of a real estate purchase.

Earnest money is the sum of money the home buyer pledges with the:

The first step in the auto-buying process should be:

Kurt has $4,500 for a down payment and thinks he can afford monthly payments of $300. If Kurt can finance a vehicle with a 7%, 4-year loan from the automobile dealer, what is the maximum amount he can afford to spend on the car? (Round to the nearest dollar.)

Variable auto ownership costs are dependent on the:

Which of the following are tax deductible if you itemize deductions?

The real estate agent's commission is generally paid by the:

You recently bought a new home. You receive title to an individual unit and joint ownership of any common areas and facilities. You have purchased a:

Which of the following is a type of down payment that lowers the potential depreciation and therefore your monthly lease payments on a leased car?

Jana has $1,500 for a down payment and thinks she can afford monthly payments of $300. If she can finance a vehicle with a 7%, 4-year loan from a credit society, what is the maximum loan amount Jana can afford? (Round to the nearest dollar.)

A buydown refers to:

If you made a down payment of $11,000 on a house worth $110,000, the lenders will require _____ because of the size of the down payment.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Using Credit

Using Consumer Loans

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters