Question 1

Explain how current interest rates can affect the price of a home.

Accepted Answer

The answer of Explain how current interest rates can affect...

Question 2

A home equity loan may also be referred to as a ____________ mortgage.

Accepted Answer

A)  shared-appreciation 
B)  graduated-payment 
C)  growing-equity 
D)  second 
E)  buy-down

Question 3

Paula has completed a mortgage application and provided evidence of employment, income, and existing debt to the potential lending institution. Although Paula has not even begun the process of looking at possible homes to buy, she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage. In what stage of the application process is she?

Accepted Answer

A)  Appraisal 
B)  Prequalification 
C)  Assessment 
D)  Amortization 
E)  Home inspection

Question 4

Explain what amortization is and how a down payment and loan duration impact it.

Accepted Answer

The answer of Explain what amortization is and how a...

Question 5

Gary Smith is purchasing one living unit in a building. What type of housing is Gary most likely going to live in?

Accepted Answer

A)  Condominium 
B)  Duplex 
C)  Cooperative 
D)  Prefabricated home 
E)  Mobile home

Question 6

Todd Foley is applying for a $100,000 mortgage. He can select either a $600 monthly payment with no points or a $520 payment with two points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?

Accepted Answer

A)  6 
B)  10 
C)  18 
D)  25 
E)  48

Question 7

A common opportunity cost associated with renting is interest lost on money spent for:

Accepted Answer

A)  the down payment. 
B)  closing costs. 
C)  property taxes. 
D)  maintenance costs. 
E)  the security deposit.

Question 8

Which one of the following is an advantage of buying?

Accepted Answer

A)  Mobility 
B)  Tax benefits 
C)  Fewer responsibilities 
D)  Minimal financial commitment 
E)  Declining equity

Question 9

An FHA-insured mortgage has less risk than a conventional mortgage for the financial institution.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  Increase in family income 
B)  Increase in interest rates 
C)  Decrease in down payment 
D)  Increase in other financial obligations 
E)  Increase in monthly living expenses

Question 11

The purpose of title insurance is to:

Accepted Answer

A)  transfer ownership of property. 
B)  reduce the chance of a decrease in property value. 
C)  protect an owner from unknown claims on the property. 
D)  protect an owner from changes in mortgage interest rates. 
E)  cover the closing costs of a real estate transaction.

Question 12

Duane Miller wants to know what price home he can afford. His annual gross income is $60,000. He has no other debt expenses and expects property taxes and insurance to cost $400 per month. He knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. He expects to make a 10% down payment. What is Duane's affordable home purchase price? Round your answer to the nearest $100.

Accepted Answer

A)  $148,300 
B)  $177,900 
C)  $164,800 
D)  $197,700 
E)  $1,483,000

Question 13

What is the purpose of an escrow account and what costs are typically included?

Accepted Answer

The answer of What is the purpose of an escrow...

Question 14

Most people select a place of residence based on available financial resources, needs, and lifestyle.

Accepted Answer

A) True 
 B)False

Question 15

Some real estate experts estimate that remodeling a kitchen can add 130 percent of the cost of remodeling to the value of the house. A remodeled kitchen costing $8,000 could add _____ to the value of the house.

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $9,600 
D)  $10,400 
E)  $13,000

Question 16

A possible disadvantage of FHA and VA mortgages can be:

Accepted Answer

A)  higher debt ratios for buyers. 
B)  a longer processing time. 
C)  loans may be assumable. 
D)  the monthly payments can be higher than those of other mortgages. 
E)  the high down payment requirements.

Question 17

Which document is used to transfer ownership of property from one party to another?

Accepted Answer

A)  Title 
B)  Escrow account 
C)  Settlement statement 
D)  Appraisal 
E)  Deed

Question 18

Renting is more advantageous than buying a home when you are seeking:

Accepted Answer

A)  lower short-term living costs. 
B)  a place to remodel. 
C)  a long-term investment. 
D)  tax benefits. 
E)  permanence of residence.

Question 19

A cost associated with renting would be:

Accepted Answer

A)  property insurance. 
B)  maintenance costs. 
C)  title insurance. 
D)  security deposit. 
E)  points.

Exam 9: The Housing Decision: Factors and Finances