Question 1

The rate cap on an ARM sets a dollar limit on how much your monthly payment can increase during any adjustment period.

Accepted Answer

A) True 
 B)False  False

Question 2

Abigail is financing her first home.She is borrowing $125,000.Her bank is loaning her the money for 15 years at an APR of 5.7%.What will Abigail's monthly mortgage payment be?

Accepted Answer

A)  $958.75 
B)  $998.22 
C)  $1,001.44 
D)  $1,034.67 
A)  $958.75 
B)  $998.22 
C)  $1,001.44 
D)  $1,034.67 D

Question 3

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.

Accepted Answer

A)  points 
B)  closing fees 
C)  escrow fees 
D)  security fees 
E)  none of the above 
A)  points 
B)  closing fees 
C)  escrow fees 
D)  security fees 
E)  none of the above A

Question 4

Another name for a closed-end lease is a(n)

Accepted Answer

A)  take-out lease. 
B)  walk-away lease. 
C)  end-purchase lease. 
D)  terminal lease. 
E)  none of the above. 
A)  take-out lease. 
B)  walk-away lease. 
C)  end-purchase lease. 
D)  terminal lease. 
E)  none of the above.

Question 5

When you decide to buy a home,which of these questions should be answered?

Accepted Answer

A)  What is the maximum amount that a bank will lend me? 
B)  Should I borrow up to this maximum? 
C)  How big of a down payment can I afford? 
D)  All of the above 
A)  What is the maximum amount that a bank will lend me? 
B)  Should I borrow up to this maximum? 
C)  How big of a down payment can I afford? 
D)  All of the above

Question 6

The prepayment privilege allows the borrower to make early cash payments toward the principal balance on their loan.

Accepted Answer

A) True 
 B)False

Question 7

As a rule of thumb,your PITI costs shouldn't exceed ________ of your pretax monthly income.

Accepted Answer

A)  8 percent 
B)  18 percent 
C)  28 percent 
D)  48 percent 
A)  8 percent 
B)  18 percent 
C)  28 percent 
D)  48 percent

Question 8

With private mortgage insurance,many lenders will allow you to borrow more than 80% of the appraised value of the home.What is the purpose of this action?

Accepted Answer

A)  The insurance will pay for damages to the home during the course of the mortgage. 
B)  It is required by federal and state law. 
C)  It protects the lender in the event the borrower is unable to make the mortgage payments. 
D)  It protects the borrower from foreclosure. 
E)  None of the above 
A)  The insurance will pay for damages to the home during the course of the mortgage. 
B)  It is required by federal and state law. 
C)  It protects the lender in the event the borrower is unable to make the mortgage payments. 
D)  It protects the borrower from foreclosure. 
E)  None of the above

Question 9

You have an option on an ARM that has a two-year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.The current initial rate is 5.35%.You can also get a 30-year,fixed-rate mortgage for 6.65%.You plan on staying in this home for at least 10 years.What would be your best choice?

Accepted Answer

A)  Probably the ARM loan since your PITI would be lower. 
B)  Probably the ARM loan since your PITI would be lower and the market rates of interest could get lower. 
C)  Probably the fixed-rate loan because your PITI will be lower. 
D)  Probably the fixed-rate loan because it is easier to budget for and it is less risky for you. 
A)  Probably the ARM loan since your PITI would be lower. 
B)  Probably the ARM loan since your PITI would be lower and the market rates of interest could get lower. 
C)  Probably the fixed-rate loan because your PITI will be lower. 
D)  Probably the fixed-rate loan because it is easier to budget for and it is less risky for you.

Question 10

What are the main financial questions you should ask yourself prior to purchasing a home?

Accepted Answer

1. What is the maximum amount the lender

Question 11

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% down payment 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?

Accepted Answer

A)  The fixed-rate mortgage has an attractive rate but is more risky for them. 
B)  The ARM initial rate is lower so their PITI will be lower. 
C)  Due to Maria's job the ARM would be the better choice. 
D)  Both B and C are correct. 
A)  The fixed-rate mortgage has an attractive rate but is more risky for them. 
B)  The ARM initial rate is lower so their PITI will be lower. 
C)  Due to Maria's job the ARM would be the better choice. 
D)  Both B and C are correct.

Question 12

When is it advantageous to rent instead of buy?

Accepted Answer

Renting is a good plan when you plan to

Question 13

What factors should be considered before signing a lease?

Accepted Answer

-DETERMINE WHAT YOU CAN AFFORD (IDEALLY

Question 14

You are in the process of purchasing a new home.Expenses that the buyer and seller incur when finalizing the transfer of the ownership of the house are called

Accepted Answer

A)  end costs. 
B)  finalization costs. 
C)  transfer fees. 
D)  closing costs. 
E)  none of the above. 
A)  end costs. 
B)  finalization costs. 
C)  transfer fees. 
D)  closing costs. 
E)  none of the above.

Question 15

Carrying credit cards can increase impulse purchasing.

Accepted Answer

A) True 
 B)False

Question 16

Rob Roy is toying with the idea of buying a used car every three years instead of leasing or buying a new one.Assuming he can find a one-owner with low miles in good condition,what advantages might he enjoy?

Accepted Answer

Today,there are many good used cars on t

Question 17

PITI stands for the total of your monthly

Accepted Answer

A)  principal, income, taxes, and insurance. 
B)  principal, interest, taxes, and insurance. 
C)  principal, interest, taxes, and income. 
D)  premiums, interest, taxes, and insurance. 
A)  principal, income, taxes, and insurance. 
B)  principal, interest, taxes, and insurance. 
C)  principal, interest, taxes, and income. 
D)  premiums, interest, taxes, and insurance.

Question 18

Subprime mortgages are mortgages taken out by people with low credit scores.

Accepted Answer

A) True 
 B)False

Question 19

The two primary advantages of a 15-year mortgage over a 30-year mortgage are

Accepted Answer

A)  lower payments and prepayment privileges. 
B)  lower interest rate and lesser interest charges over the life of the loan. 
C)  greater financial flexibility and no prepayment penalties. 
D)  easier qualification criteria and more affordable initially. 
E)  none of the above. 
A)  lower payments and prepayment privileges. 
B)  lower interest rate and lesser interest charges over the life of the loan. 
C)  greater financial flexibility and no prepayment penalties. 
D)  easier qualification criteria and more affordable initially. 
E)  none of the above.

Question 20

Most predatory lenders offer prepayment privileges with their mortgages.

Accepted Answer

A) True 
 B)False

The rate cap on an ARM sets a dollar limit on how much your monthly payment can increase during any adjustment period.

Abigail is financing her first home.She is borrowing $125,000.Her bank is loaning her the money for 15 years at an APR of 5.7%.What will Abigail's monthly mortgage payment be?

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.

Another name for a closed-end lease is a(n)

When you decide to buy a home,which of these questions should be answered?

The prepayment privilege allows the borrower to make early cash payments toward the principal balance on their loan.

As a rule of thumb,your PITI costs shouldn't exceed ________ of your pretax monthly income.

With private mortgage insurance,many lenders will allow you to borrow more than 80% of the appraised value of the home.What is the purpose of this action?

You have an option on an ARM that has a two-year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.The current initial rate is 5.35%.You can also get a 30-year,fixed-rate mortgage for 6.65%.You plan on staying in this home for at least 10 years.What would be your best choice?

What are the main financial questions you should ask yourself prior to purchasing a home?

When is it advantageous to rent instead of buy?

What factors should be considered before signing a lease?

You are in the process of purchasing a new home.Expenses that the buyer and seller incur when finalizing the transfer of the ownership of the house are called

Carrying credit cards can increase impulse purchasing.

Rob Roy is toying with the idea of buying a used car every three years instead of leasing or buying a new one.Assuming he can find a one-owner with low miles in good condition,what advantages might he enjoy?

PITI stands for the total of your monthly

Subprime mortgages are mortgages taken out by people with low credit scores.

The two primary advantages of a 15-year mortgage over a 30-year mortgage are

Most predatory lenders offer prepayment privileges with their mortgages.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 8: The Home and Automobile Decision

The rate cap on an ARM sets a dollar limit on how much your monthly payment can increase during any adjustment period.

Abigail is financing her first home.She is borrowing $125,000.Her bank is loaning her the money for 15 years at an APR of 5.7%.What will Abigail's monthly mortgage payment be?

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.

Another name for a closed-end lease is a(n)

When you decide to buy a home,which of these questions should be answered?

The prepayment privilege allows the borrower to make early cash payments toward the principal balance on their loan.

As a rule of thumb,your PITI costs shouldn't exceed ________ of your pretax monthly income.

With private mortgage insurance,many lenders will allow you to borrow more than 80% of the appraised value of the home.What is the purpose of this action?

You have an option on an ARM that has a two-year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.The current initial rate is 5.35%.You can also get a 30-year,fixed-rate mortgage for 6.65%.You plan on staying in this home for at least 10 years.What would be your best choice?

What are the main financial questions you should ask yourself prior to purchasing a home?

When is it advantageous to rent instead of buy?

What factors should be considered before signing a lease?

You are in the process of purchasing a new home.Expenses that the buyer and seller incur when finalizing the transfer of the ownership of the house are called

Carrying credit cards can increase impulse purchasing.

Rob Roy is toying with the idea of buying a used car every three years instead of leasing or buying a new one.Assuming he can find a one-owner with low miles in good condition,what advantages might he enjoy?

PITI stands for the total of your monthly

Subprime mortgages are mortgages taken out by people with low credit scores.

The two primary advantages of a 15-year mortgage over a 30-year mortgage are

Most predatory lenders offer prepayment privileges with their mortgages.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Student and Consumer Loans: The Role of Planned Borrowing

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters