Exam 5: Making Automobile and Housing Decisions

____ and ____ are often paid as part of one's house payment and held in an escrow account.

Renting affords more flexibility than home ownership.

If lenders specify a loan-to-value ratio of 80 percent,then a buyer must make a 20% down payment on the purchase of a home.

Dick and Jane have just purchased a home and are calculating how much money they will need when the closing day rolls around.The purchase price is $200,000.They will make a 20% down payment,and they must pay 2 points on the loan.Closing costs should be 3% of the purchase price.What is the total dollar amount they will need at closing? (Show all work.)

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Lessor | Lessee] is another term for landlord.

The monthly mortgage payment divided by your monthly gross income equals an affordability ratio.

____ can be deducted on your federal tax return.

A fee charged by lenders as a condition of a mortgage loan that effectively raises the interest rate is called

Early termination clauses on an auto lease typically apply to cars that are stolen or totaled in an accident as well as when you just want to return the vehicle before the end of the lease.

One can arrange auto loans through

First-time homebuyers can withdraw up to $10,000 from an IRA without penalty before age 59 1/2.

The Veterans Administration guarantees mortgage loans given to qualified veterans.

Your mortgage payment is $1,400 per month.Of this amount,insurance is $50,property taxes are $200,and interest is about $1,000.Assuming you have other itemized deductions that already exceed your standard deduction and that you are in the 28% marginal tax bracket,what is the reduction in your tax liability as a result of owning a home with this mortgage? (Show all work.)

The most popular mortgage loan for financing a home purchase is a

For the first 15 years of a 30-year mortgage,the majority of each monthly payment goes to

Which of the following is tax deductible if one itemizes deductions?

Judy has $2,000 for a down payment on a vehicle and she can afford monthly payments of $400.She wants to finance a vehicle over no more than 4 years.If lenders are currently offering 6 percent interest on 5-year loans,what is the maximum price Judy can pay for a vehicle?

A condominium buyer will make monthly mortgage payments as well as pay a fee for services and maintenance of common areas.

Points paid to secure a mortgage to purchase a primary residence will generally be tax deductible as interest in the year they are paid.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -For most homeowners,the most important financial reason for owning a home is for the [inflation hedge | tax shelter].