Question 1

A common financial benefit of home ownership is

Accepted Answer

A)  increased property value. 
B)  tax deductibility of the down payment. 
C)  amortization of the growth of equity. 
D)  a low security deposit. 
E)  low interest financing. 
A)  increased property value. 
B)  tax deductibility of the down payment. 
C)  amortization of the growth of equity. 
D)  a low security deposit. 
E)  low interest financing.

Question 2

Lenders commonly use a GDS ratio of 30% and a TDS ratio of 40% as guidelines to determine the amount you can comfortably afford for housing.

Accepted Answer

A) True 
 B)False

Question 3

Lenders commonly use a GDS ratio of 50% and a TDS ratio of 60% as guidelines to determine the amount you can comfortably afford for housing.

Accepted Answer

A) True 
 B)False

Question 4

What is a variable rate mortgage? What factors should you consider?

Accepted Answer

The variable-rate mortgage (VRM), also r

Question 5

Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would increase the amount that a person could afford to spend on a home?

Accepted Answer

A)  lower financial obligations 
B)  increased interest rates 
C)  increased down payment 
D)  decreased family income 
E)  increased monthly living expenses 
A)  lower financial obligations 
B)  increased interest rates 
C)  increased down payment 
D)  decreased family income 
E)  increased monthly living expenses

Question 7

Renting is more advantageous than buying a home for

Accepted Answer

A)  minimal financial commitment. 
B)  financial benefits. 
C)  long-term investment purposes. 
D)  receiving tax benefits. 
E)  permanence of residence. 
A)  minimal financial commitment. 
B)  financial benefits. 
C)  long-term investment purposes. 
D)  receiving tax benefits. 
E)  permanence of residence.

Question 8

Jonathan Muyal needs to sell his home because of a job transfer to another city. What actions should Jonathan take to sell his home?

Accepted Answer

When selling a home, you should first pr

Question 9

Negative amortization has the effect of:

Accepted Answer

A)  extending the number of payments to pay off the mortgage. 
B)  decreasing the number of payments to pay off the mortgage. 
C)  a lower escrow account. 
D)  lower interest rates. 
E)  a lower down payment. 
A)  extending the number of payments to pay off the mortgage. 
B)  decreasing the number of payments to pay off the mortgage. 
C)  a lower escrow account. 
D)  lower interest rates. 
E)  a lower down payment.

Question 10

Belinda Williams plans to rent instead of buying her house. What advantage of renting will Belinda encounter?

Accepted Answer

A)  tax advantages 
B)  financial benefits 
C)  community pride 
D)  lower initial costs 
E)  home improvement flexibility 
A)  tax advantages 
B)  financial benefits 
C)  community pride 
D)  lower initial costs 
E)  home improvement flexibility

Question 11

The total debt service ratio is your monthly mortgage payment and other outstanding debts as a percentage of your gross monthly income.

Accepted Answer

A) True 
 B)False

Question 12

Past interest rates can affect the price of a home.

Accepted Answer

A) True 
 B)False

Question 13

A split-rate mortgage helps to reduce interest rate risk.

Accepted Answer

A) True 
 B)False

Question 14

Ease of mobility is an advantage of renting.

Accepted Answer

A) True 
 B)False

Question 15

The term "sub-prime mortgage crisis" refers to

Accepted Answer

A)  the difficulty new home owners have in negotiating a low interest rate with banks 
B)  obtaining a mortgage interest rate of 8 percent instead of 7 percent 
C)  the financial crisis precipitated in 2007 after a sharp increase in mortgage foreclosures 
D)  lower interest rates on shorter term mortgages than longer term mortgages 
E)  higher interest rates on shorter term mortgages than longer term mortgages 
A)  the difficulty new home owners have in negotiating a low interest rate with banks 
B)  obtaining a mortgage interest rate of 8 percent instead of 7 percent 
C)  the financial crisis precipitated in 2007 after a sharp increase in mortgage foreclosures 
D)  lower interest rates on shorter term mortgages than longer term mortgages 
E)  higher interest rates on shorter term mortgages than longer term mortgages

Question 16

Negotiating a purchase price for a home usually involves an offer and counteroffers.

Accepted Answer

A) True 
 B)False

Question 17

Refinancing of a mortgage is recommended when

Accepted Answer

A)  interest rates rise. 
B)  interest rates fall. 
C)  the escrow account balance declines. 
D)  two or more points are required by the lender at the time of closing. 
E)  refinancing costs are low 
A)  interest rates rise. 
B)  interest rates fall. 
C)  the escrow account balance declines. 
D)  two or more points are required by the lender at the time of closing. 
E)  refinancing costs are low

Question 18

A cost associated with home buying would be

Accepted Answer

A)  appraisal. 
B)  home inspection. 
C)  property appraisal. 
D)  land transfer tax. 
E)  all are cost associated with buying a house. 
A)  appraisal. 
B)  home inspection. 
C)  property appraisal. 
D)  land transfer tax. 
E)  all are cost associated with buying a house.

Question 19

Which of the following is not a common financial risk of home ownership?

Accepted Answer

A)  interest rates may change. 
B)  property values may decrease. 
C)  repairs and maintenance. 
D)  susceptibility to macroeconomic factors 
E)  capital gains taxes on the sale of a principal residence. 
A)  interest rates may change. 
B)  property values may decrease. 
C)  repairs and maintenance. 
D)  susceptibility to macroeconomic factors 
E)  capital gains taxes on the sale of a principal residence.

Question 20

One significant drawback of home ownership is financial uncertainty.

Accepted Answer

A) True 
 B)False

A common financial benefit of home ownership is

Lenders commonly use a GDS ratio of 30% and a TDS ratio of 40% as guidelines to determine the amount you can comfortably afford for housing.

Lenders commonly use a GDS ratio of 50% and a TDS ratio of 60% as guidelines to determine the amount you can comfortably afford for housing.

What is a variable rate mortgage? What factors should you consider?

Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement.

Which of the following would increase the amount that a person could afford to spend on a home?

Renting is more advantageous than buying a home for

Jonathan Muyal needs to sell his home because of a job transfer to another city. What actions should Jonathan take to sell his home?

Negative amortization has the effect of:

Belinda Williams plans to rent instead of buying her house. What advantage of renting will Belinda encounter?

The total debt service ratio is your monthly mortgage payment and other outstanding debts as a percentage of your gross monthly income.

Past interest rates can affect the price of a home.

A split-rate mortgage helps to reduce interest rate risk.

Ease of mobility is an advantage of renting.

The term "sub-prime mortgage crisis" refers to

Negotiating a purchase price for a home usually involves an offer and counteroffers.

Refinancing of a mortgage is recommended when

A cost associated with home buying would be

Which of the following is not a common financial risk of home ownership?

One significant drawback of home ownership is financial uncertainty.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

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Exam 7: The Finances of Housing

A common financial benefit of home ownership is

Lenders commonly use a GDS ratio of 30% and a TDS ratio of 40% as guidelines to determine the amount you can comfortably afford for housing.

Lenders commonly use a GDS ratio of 50% and a TDS ratio of 60% as guidelines to determine the amount you can comfortably afford for housing.

What is a variable rate mortgage? What factors should you consider?

Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement.

Which of the following would increase the amount that a person could afford to spend on a home?

Renting is more advantageous than buying a home for

Jonathan Muyal needs to sell his home because of a job transfer to another city. What actions should Jonathan take to sell his home?

Negative amortization has the effect of:

Belinda Williams plans to rent instead of buying her house. What advantage of renting will Belinda encounter?

The total debt service ratio is your monthly mortgage payment and other outstanding debts as a percentage of your gross monthly income.

Past interest rates can affect the price of a home.

A split-rate mortgage helps to reduce interest rate risk.

Ease of mobility is an advantage of renting.

The term "sub-prime mortgage crisis" refers to

Negotiating a purchase price for a home usually involves an offer and counteroffers.

Refinancing of a mortgage is recommended when

A cost associated with home buying would be

Which of the following is not a common financial risk of home ownership?

One significant drawback of home ownership is financial uncertainty.

Personal Financial Planning: An Introduction

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

The Banking Services of Financial Institutions

Introduction to Consumer Credit

Choosing a Source Credit: the Costs of Credit Alternatives

Home and Automobile Insurance

Life, Health, and Disability Insurance

Fundamentals of Investing

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Retirement Planning

Estate Planning

Filters