Question 1

A cost associated with renting would be:

Accepted Answer

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

Question 2

A conventional mortgage usually involves:

Accepted Answer

A) a variable interest rate. 
B) a government guarantee. 
C) a balloon payment. 
D) equal payments. 
E) a payment cap.

Question 3

The purpose of a counteroffer is to:

Accepted Answer

A) negotiate the purchase price. 
B) reduce mortgage payments. 
C) lower real estate property taxes. 
D) avoid paying points at closing. 
E) avoid paying the real estate agent's commission.

Question 4

Renting would be most appropriate for people who:

Accepted Answer

A) want to reduce their taxes. 
B) have difficulty establishing credit. 
C) have limited funds currently available. 
D) enjoy remodeling their residence. 
E) desire the financial benefits of increased equity.

Question 5

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 6

A condominium involves:

Accepted Answer

A) renting a mobile home. 
B) buying stock in a nonprofit organization. 
C) ownership of an individual living unit. 
D) government-subsidized housing. 
E) renting a house with the option to buy.

Question 7

What is prepaid interest charged by a mortgage company called?

Accepted Answer

A) escrow 
B) points 
C) origination fee 
D) title fee 
E) deed

Question 8

A VA-guaranteed loan program provides assistance to:

Accepted Answer

A) military veterans. 
B) recent college graduates. 
C) low-income homebuyers. 
D) government employees. 
E) the elderly.

Question 9

Which types of problems are least likely to be covered by a home buyer warranty?

Accepted Answer

A) structural 
B) wiring 
C) plumbing 
D) heating/cooling 
E) appliance

Question 10

If closing costs of $1,400 are associated with the refinance of a mortgage that would reduce the monthly payment from $980 to $870,it would take approximately ____ months to cover these costs.

Accepted Answer

A) 6 
B) 9 
C) 13 
D) 17 
E) 22

Question 11

The most commonly considered factor when selecting a home is the:

Accepted Answer

A) size of the home. 
B) condition of the home. 
C) location of the home. 
D) local zoning laws. 
E) current interest rates.

Exam 9: The Housing Decision: Factors and Finances