Question 1

According to Edmunds.com,a new car's value declines by 15 to 19 percent in the first minute of ownership after you leave the lot.

Accepted Answer

A) True 
 B)False

Question 2

Someone who plans on selling his or her home within the next 3 years should get a fixed-rate mortgage.

Accepted Answer

A) True 
 B)False

Question 3

The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car.

Accepted Answer

A) True 
 B)False

Question 4

Billy has chosen to purchase a new vehicle.The vehicle costs $15,000.His APR is 10% and he will be financing the vehicle for 36 months.How much will Billy pay each month for his new vehicle?

Accepted Answer

A)  $484.01 
B)  $296.35 
C)  $312.66 
D)  $405.29 
E)  $496.33 
A)  $484.01 
B)  $296.35 
C)  $312.66 
D)  $405.29 
E)  $496.33

Question 5

What is not a benefit normally associated with home ownership?

Accepted Answer

A)  Tax advantages for those who qualify 
B)  Flexibility to respond to employment opportunities 
C)  Ability to build equity and net worth 
D)  A potential source of collateral for future loans 
A)  Tax advantages for those who qualify 
B)  Flexibility to respond to employment opportunities 
C)  Ability to build equity and net worth 
D)  A potential source of collateral for future loans

Question 6

For many consumers,a good school district is an important consideration when purchasing a home.

Accepted Answer

A) True 
 B)False

Question 7

Juanita has determined that the PITI on the house she would like to purchase will be $1,260 per month.What is the minimum gross salary she will need to qualify for a mortgage from a reputable lender?

Accepted Answer

A)  $6,300 per month 
B)  $4,500 per month 
C)  $3,500 per month 
D)  $5,040 per month 
A)  $6,300 per month 
B)  $4,500 per month 
C)  $3,500 per month 
D)  $5,040 per month

Question 8

A(n)________ ARM combines the aspects of fixed-rate and adjustable-rate mortgages.

Accepted Answer

A)  two-step 
B)  convertible 
C)  reduction-option 
D)  option payment 
A)  two-step 
B)  convertible 
C)  reduction-option 
D)  option payment

Question 9

Regardless of what a potential borrower thinks he or she can afford,banks and other lenders impose a maximum amount that they will lend to a borrower based on the person's income and current debt levels.According the Keown book,what three factors do lenders look at when evaluating a potential borrower?

Accepted Answer

1. Financial history
2. Abilit

Question 10

The initial rate on an adjustable rate mortgage (ARM)is sometimes called the teaser rate.

Accepted Answer

A) True 
 B)False

Question 11

How can you benefit from following the smart buying steps?

Accepted Answer

A)  Smart buying allows a higher standard of living because you make smarter purchases. 
B)  Smart buying allows you to buy what you want when you want it. 
C)  Smart buying helps you maintain your budget. 
D)  Both A and C are correct. 
A)  Smart buying allows a higher standard of living because you make smarter purchases. 
B)  Smart buying allows you to buy what you want when you want it. 
C)  Smart buying helps you maintain your budget. 
D)  Both A and C are correct.

Question 12

From a borrower's perspective,you're better off with an ARM if interest rates rise.

Accepted Answer

A) True 
 B)False

Question 13

The two most common types of two-step mortgages are the 8/22 and 12/18,in which lenders offer a lower interest rate for the first 8 or 12 years and then adjust the rate for the remaining 22 or 18 years.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following is not a key to finding housing that fits your needs?

Accepted Answer

A)  Location 
B)  Deciding what features you are looking for 
C)  Present needs 
D)  Insurance costs 
E)  Future needs 
A)  Location 
B)  Deciding what features you are looking for 
C)  Present needs 
D)  Insurance costs 
E)  Future needs

Question 15

A ________ mortgage is designed to let the homeowner pay off the mortgage early.Payments begin at the 30-year fixed rate,then increase each year.

Accepted Answer

A)  balloon payment 
B)  growing equity 
C)  shared appreciation 
D)  graduated payments 
E)  conventional 
A)  balloon payment 
B)  growing equity 
C)  shared appreciation 
D)  graduated payments 
E)  conventional

Question 16

Candice is purchasing a new Jeep.She has the price negotiated down to what she thought was the lowest possible price until she heard that her Jeep has a holdback amount of 3%.Is it fair for Candice to ask the dealership to take the holdback amount off her final sales price?

Accepted Answer

A)  Absolutely, this would decrease the mark up price of the Jeep and save Candice additional dollars. 
B)  No. The dealership would most likely lose money on the sale. 
A)  Absolutely, this would decrease the mark up price of the Jeep and save Candice additional dollars. 
B)  No. The dealership would most likely lose money on the sale.

Question 17

Bob and Mary Kay have gross household income of $7,000 per month.They both have great credit scores and the home they are interested in buying appraised higher than the selling price.They have combined monthly debt payments of $300 in student loans,$650 in car loans,and they pay their credit cards in full every month.The PITI on the new home will be $1,800 per month.Before they pay the $250 loan application fee,they are asking you for your opinion on whether they will get approved for a mortgage.What will you advise them?

Accepted Answer

A)  Based on the 28 percent rule they can afford the $1,800 PITI and will be approved for the mortgage. 
B)  Based on the 28 percent rule they cannot afford the $1,800 PITI and will be denied the mortgage. 
C)  Based on the 36 percent rule they will be approved for the mortgage. 
D)  Based on the 36 percent rule they have too much other debt and will be denied the mortgage. 
A)  Based on the 28 percent rule they can afford the $1,800 PITI and will be approved for the mortgage. 
B)  Based on the 28 percent rule they cannot afford the $1,800 PITI and will be denied the mortgage. 
C)  Based on the 36 percent rule they will be approved for the mortgage. 
D)  Based on the 36 percent rule they have too much other debt and will be denied the mortgage.

Question 18

Your mortgage is an ARM with a 1 year adjustment interval,4% margin,and a 2% periodic cap.Your initial APR on this loan was 4.5%.Over the last 5 years the market rates of interest have risen dramatically.The current interest rate index for your loan is 8.5 %.What APR are your monthly payments being calculated on today?

Accepted Answer

A)  4.5% 
B)  8.5% 
C)  10.5% 
D)  12.5% 
A)  4.5% 
B)  8.5% 
C)  10.5% 
D)  12.5%

Question 19

A mortgage loan in which the interest rate charged fluctuates with the level of current interest rates is called a(n)

Accepted Answer

A)  MRA. 
B)  MAR. 
C)  RAM. 
D)  ARM. 
E)  none of the above. 
A)  MRA. 
B)  MAR. 
C)  RAM. 
D)  ARM. 
E)  none of the above.

Question 20

List the four steps in the automobile decision.

Accepted Answer

Step 1: Differentiate want fro

According to Edmunds.com,a new car's value declines by 15 to 19 percent in the first minute of ownership after you leave the lot.

Someone who plans on selling his or her home within the next 3 years should get a fixed-rate mortgage.

The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car.

Billy has chosen to purchase a new vehicle.The vehicle costs $15,000.His APR is 10% and he will be financing the vehicle for 36 months.How much will Billy pay each month for his new vehicle?

What is not a benefit normally associated with home ownership?

For many consumers,a good school district is an important consideration when purchasing a home.

Juanita has determined that the PITI on the house she would like to purchase will be $1,260 per month.What is the minimum gross salary she will need to qualify for a mortgage from a reputable lender?

A(n)________ ARM combines the aspects of fixed-rate and adjustable-rate mortgages.

The initial rate on an adjustable rate mortgage (ARM)is sometimes called the teaser rate.

How can you benefit from following the smart buying steps?

From a borrower's perspective,you're better off with an ARM if interest rates rise.

The two most common types of two-step mortgages are the 8/22 and 12/18,in which lenders offer a lower interest rate for the first 8 or 12 years and then adjust the rate for the remaining 22 or 18 years.

Which one of the following is not a key to finding housing that fits your needs?

A ________ mortgage is designed to let the homeowner pay off the mortgage early.Payments begin at the 30-year fixed rate,then increase each year.

Candice is purchasing a new Jeep.She has the price negotiated down to what she thought was the lowest possible price until she heard that her Jeep has a holdback amount of 3%.Is it fair for Candice to ask the dealership to take the holdback amount off her final sales price?

A mortgage loan in which the interest rate charged fluctuates with the level of current interest rates is called a(n)

List the four steps in the automobile decision.

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

According to Edmunds.com,a new car's value declines by 15 to 19 percent in the first minute of ownership after you leave the lot.

Someone who plans on selling his or her home within the next 3 years should get a fixed-rate mortgage.

The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car.

Billy has chosen to purchase a new vehicle.The vehicle costs $15,000.His APR is 10% and he will be financing the vehicle for 36 months.How much will Billy pay each month for his new vehicle?

What is not a benefit normally associated with home ownership?

For many consumers,a good school district is an important consideration when purchasing a home.

Juanita has determined that the PITI on the house she would like to purchase will be $1,260 per month.What is the minimum gross salary she will need to qualify for a mortgage from a reputable lender?

A(n)________ ARM combines the aspects of fixed-rate and adjustable-rate mortgages.

The initial rate on an adjustable rate mortgage (ARM)is sometimes called the teaser rate.

How can you benefit from following the smart buying steps?

From a borrower's perspective,you're better off with an ARM if interest rates rise.

The two most common types of two-step mortgages are the 8/22 and 12/18,in which lenders offer a lower interest rate for the first 8 or 12 years and then adjust the rate for the remaining 22 or 18 years.

Which one of the following is not a key to finding housing that fits your needs?

A ________ mortgage is designed to let the homeowner pay off the mortgage early.Payments begin at the 30-year fixed rate,then increase each year.

Candice is purchasing a new Jeep.She has the price negotiated down to what she thought was the lowest possible price until she heard that her Jeep has a holdback amount of 3%.Is it fair for Candice to ask the dealership to take the holdback amount off her final sales price?

A mortgage loan in which the interest rate charged fluctuates with the level of current interest rates is called a(n)

List the four steps in the automobile decision.

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