Exam 8: The Home and Automobile Decision

Hector a Maria have been married for almost one year now and are thinking about buying a house. Maria is an executive for a large, multi-national corporation with offices around the world. She has been told by her company that she will be transferred to a new location every three years. Hector is a car salesman and he is willing to move to wherever Maria gets transferred. Together they make $8,000 in gross monthly income and pay 40% in taxes and withholdings every month. Between them they have monthly payment of $400 in student loans and $700 in car loans, and their credit cards payments average $450 per month. They currently lease a luxury condo for $1,400 per month. They travel to Cancun every Christmas. Since they both work a lot of hours, they eat out at restaurants for most meals. They currently have nothing in savings but Hector's grandparents have said they will give them a 20% downpayment for the new home. -They saw in the newspaper that they can get a fixed rate mortgage for 6.65% or a two-year ARM with an initial rate of 5.50%. Which is true about their mortgage choices?

In auto sales, a ________ is an amount of money, generally in the 2% to 3% range, that the manufacturer gives the dealer for selling an automobile.

Buying a home generally isn't desirable if you don't intend to stay in it for more than two or three years.

Smart buying means enjoying the highest standard of living that you can based on your income and budget.

Young, single people often live in rental housing, since they may not yet have the funds to purchase a home.

If you are considering purchasing a used car you should

Subprime mortgages are illegal.

Which of these is not an advantage associated with an assumable loan?

Ben recently paid off his school loans and is looking to buy a home. He has qualified for an APR of 5.2% and plans on making payments for the next 15 years. He anticipates he can afford a monthly payment of $660.00. How much of a mortgage can Ben afford?

Evaluating whether you need or simply want a sun roof is an example of using the smart buying steps.

How much would the monthly payment be on a mortgage of $250,000 for 30 years at a rate of 6.0%?

What are the basic financing options when considering a new vehicle?

The ________ mortgage sets the payments in advance in such a way that they rise steadily for 5 to 10 years, then level off to allow a person to buy a home earlier in life.

A co-op is an apartment building owned by a corporation where residents of the building are stock holders. When you buy into a co-op, you buy shares that reflect the dollar value of your space. The larger and more desirable the space you want requires purchase of more shares.

Automobile leasing is actually just a long-term rental agreement with the lessor.

If the roof of your condominium building needs expensive repairs, then the condominium board will pay for repairs at no expense to you.

Describe the keys to obtaining a "good" lease.

Why may it be a good idea for newlyweds to lease a few years before purchasing a home together?

You have just obtained a mortgage to purchase your home. The ________ that you paid to obtain the loan are charges that must be paid at the time of the sale and serve to raise the effective cost of the loan.

It's best to have an ARM with the longest adjustment interval available.