Question 1

Homes near areas that have just been zoned for industrial use become more valuable.

Accepted Answer

A) True 
 B)False

Question 2

Online real estate services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

Accepted Answer

A) True 
 B)False

Question 3

The type of mortgage that is usually the shortest term and will require further action at the end of it is a(n)

Accepted Answer

A)  graduated payment mortgage. 
B)  balloon payment mortgage. 
C)  adjustable rate mortgage. 
D)  fixed rate mortgage. 
A)  graduated payment mortgage. 
B)  balloon payment mortgage. 
C)  adjustable rate mortgage. 
D)  fixed rate mortgage.

Question 4

A ________ is responsible for determining the value of the home as part of the loan process.

Accepted Answer

A)  banker 
B)  loan officer 
C)  real estate appraiser 
D)  real estate agent 
A)  banker 
B)  loan officer 
C)  real estate appraiser 
D)  real estate agent

Question 5

In negotiating a price for the purchase of a home,you should do all of the following,except

Accepted Answer

A)  offer the highest price you can afford first to get the purchase settled quickly. 
B)  write up a contract. 
C)  assess how market conditions affect the value of the home. 
D)  understand that real estate agents are brokers between the buyer and seller. 
A)  offer the highest price you can afford first to get the purchase settled quickly. 
B)  write up a contract. 
C)  assess how market conditions affect the value of the home. 
D)  understand that real estate agents are brokers between the buyer and seller.

Question 6

During a period when interest rates are very low by historical standards and are expected to increase substantially over time,individuals should choose

Accepted Answer

A)  an ARM with a rate that adjusts after three years. 
B)  a fixed-rate mortgage. 
C)  an ARM that adjusts after one year. 
D)  an ARM with a rate that adjusts every year for five years and then converts to a fixed rate. 
A)  an ARM with a rate that adjusts after three years. 
B)  a fixed-rate mortgage. 
C)  an ARM that adjusts after one year. 
D)  an ARM with a rate that adjusts every year for five years and then converts to a fixed rate.

Question 7

If a person chooses to purchase a more expensive home,he or she may have to cut expenses in other areas such as entertainment.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about interest-only mortgages is not true?

Accepted Answer

A)  Interest-only mortgages cannot be Qualified Mortgages under The Consumer Financial Protection Bureau's rules. 
B)  Mortgage payments may increase abruptly. 
C)  Interest-only mortgages allow the borrower to pay only interest for the life of the mortgage. 
D)  Interest-only mortgages were popular before the financial crisis. 
A)  Interest-only mortgages cannot be Qualified Mortgages under The Consumer Financial Protection Bureau's rules. 
B)  Mortgage payments may increase abruptly. 
C)  Interest-only mortgages allow the borrower to pay only interest for the life of the mortgage. 
D)  Interest-only mortgages were popular before the financial crisis.

Question 9

Most home purchases are made initially

Accepted Answer

A)  with payments by personal check. 
B)  with a 10 to 20% down payment and a mortgage. 
C)  with a 5% down payment. 
D)  with no down payment. 
A)  with payments by personal check. 
B)  with a 10 to 20% down payment and a mortgage. 
C)  with a 5% down payment. 
D)  with no down payment.

Question 10

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing,how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

Accepted Answer

A)  Five months 
B)  Seven months 
C)  Eighteen months 
D)  The maturity of the loan 
A)  Five months 
B)  Seven months 
C)  Eighteen months 
D)  The maturity of the loan

Question 11

Your home value is likely to be higher with all of the following,except

Accepted Answer

A)  being close to a school. 
B)  having a convenient location. 
C)  being in an area that has just been zoned for industrial use. 
D)  being in an area where a large retail business has just moved in. 
A)  being close to a school. 
B)  having a convenient location. 
C)  being in an area that has just been zoned for industrial use. 
D)  being in an area where a large retail business has just moved in.

Question 12

When purchasing a home,which of the following costs will you not incur?

Accepted Answer

A)  Origination fee 
B)  Real estate agent's commission 
C)  Application fee 
D)  Appraisal fee 
A)  Origination fee 
B)  Real estate agent's commission 
C)  Application fee 
D)  Appraisal fee

Question 13

Tiffany and Jason want to obtain a $72,000 mortgage.Their payments would be $730 for a 15-year mortgage and $579 for a 30-year mortgage.What would be their total savings in interest by using a 15-year mortgage?

Accepted Answer

A)  $27,180 
B)  $54,360 
C)  $77,040 
D)  $131,400 
A)  $27,180 
B)  $54,360 
C)  $77,040 
D)  $131,400

Question 14

Which of the following is true of private mortgage insurance?

Accepted Answer

A)  It generally is required if the borrower makes a down payment of less than 20%. 
B)  It costs $20 to $25 per year. 
C)  It protects the borrower in the event that the lender goes bankrupt. 
D)  It is another name for title insurance. 
A)  It generally is required if the borrower makes a down payment of less than 20%. 
B)  It costs $20 to $25 per year. 
C)  It protects the borrower in the event that the lender goes bankrupt. 
D)  It is another name for title insurance.

Question 15

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Accepted Answer

A)  insurance account. 
B)  appraisal account. 
C)  escrow account. 
D)  default prevention account. 
A)  insurance account. 
B)  appraisal account. 
C)  escrow account. 
D)  default prevention account.

Question 16

Renting is almost always a better financial option since owning a home has so many costs such as maintenance,insurance,and taxes.

Accepted Answer

A) True 
 B)False

Question 17

The first step in the home-buying process should be to

Accepted Answer

A)  identify the specific home you want to purchase. 
B)  determine a realistic price range of homes you can afford. 
C)  compare the cost of buying to renting. 
D)  find a good real estate broker. 
A)  identify the specific home you want to purchase. 
B)  determine a realistic price range of homes you can afford. 
C)  compare the cost of buying to renting. 
D)  find a good real estate broker.

Question 18

The initial rate on an ARM will typically be

Accepted Answer

A)  relatively low, which benefits the homeowner. 
B)  relatively high to allow the bank to recoup costs. 
C)  about the same as a fixed rate loan on the same maturity. 
D)  set by state law. 
A)  relatively low, which benefits the homeowner. 
B)  relatively high to allow the bank to recoup costs. 
C)  about the same as a fixed rate loan on the same maturity. 
D)  set by state law.

Question 19

The total cost of owning a home versus renting is calculated by

Accepted Answer

A)  adding up the repair and maintenance expenses associated with the home. 
B)  subtracting the tax savings from the mortgage interest expense and taxes. 
C)  subtracting the expected value of the equity of the home at the end of the period. 
D)  All of the above. 
A)  adding up the repair and maintenance expenses associated with the home. 
B)  subtracting the tax savings from the mortgage interest expense and taxes. 
C)  subtracting the expected value of the equity of the home at the end of the period. 
D)  All of the above.

Question 20

Which of the following costs associated with home ownership is hardest to budget?

Accepted Answer

A)  Insurance 
B)  Taxes 
C)  Repairs 
D)  Mortgage payments 
A)  Insurance 
B)  Taxes 
C)  Repairs 
D)  Mortgage payments

Exam 10: Purchasing and Financing a Home

Homes near areas that have just been zoned for industrial use become more valuable.

Online real estate services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

The type of mortgage that is usually the shortest term and will require further action at the end of it is a(n)

A ________ is responsible for determining the value of the home as part of the loan process.

In negotiating a price for the purchase of a home,you should do all of the following,except

During a period when interest rates are very low by historical standards and are expected to increase substantially over time,individuals should choose

If a person chooses to purchase a more expensive home,he or she may have to cut expenses in other areas such as entertainment.

Which of the following statements about interest-only mortgages is not true?

Most home purchases are made initially

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing,how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

Your home value is likely to be higher with all of the following,except

When purchasing a home,which of the following costs will you not incur?

Tiffany and Jason want to obtain a $72,000 mortgage.Their payments would be $730 for a 15-year mortgage and $579 for a 30-year mortgage.What would be their total savings in interest by using a 15-year mortgage?

Which of the following is true of private mortgage insurance?

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Renting is almost always a better financial option since owning a home has so many costs such as maintenance,insurance,and taxes.

The first step in the home-buying process should be to

The initial rate on an ARM will typically be

The total cost of owning a home versus renting is calculated by

Which of the following costs associated with home ownership is hardest to budget?

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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