Question 1

Other factors being equal,fixed-rate mortgages will have higher interest rates initially than adjustable-rate mortgages.

Accepted Answer

A) True 
 B)False

Question 2

The greatest fixed cost involved with owning an automobile is usually the monthly loan payments.

Accepted Answer

A) True 
 B)False

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-You are paying on a car loan,a furniture loan,and a student loan.This will have [an | no] effect on the lender's decision to grant you a mortgage loan.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 4

Which of the following is true regarding cooperative apartments?

Accepted Answer

A)  They are essentially the same as condominiums. 
B)  It may be more difficult to get a home mortgage than for other types of housing. 
C)  They tend to be more expensive than single-family dwellings. 
D)  They produce more tax advantages than other types of homes. 
E)  All of the above

Question 5

Mike (age 40)is purchasing his second home for $200,000 with a 25% down payment.He will withdraw some of the down payment from his IRA.He will have to pay ____ on the IRA withdrawal.

Accepted Answer

A)  federal income taxes 
B)  an early withdrawal penalty 
C)  Social Security taxes 
D)  a and b 
E)  a,b,and c

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-With a(n)[closed-end | open-end] lease,one owes more at the end of the lease if the car is worth less than its projected value at the end of the lease.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 7

The sales contract on an automobile purchase contractually binds you to purchase the car at the price you offered in the contract.

Accepted Answer

A) True 
 B)False

Question 8

Patrick would like to know the monthly payments and the total finance charges on the following 2 loans:

Accepted Answer

The answer of Patrick would like to know the monthly...

Question 9

The FHA ____ high loan-to-value ratio mortgages.

Accepted Answer

A)  guarantees 
B)  insures 
C)  subsidizes 
D)  grants 
E)  allows

Question 10

Anna purchased a vehicle six years ago for $25,000.She recently sold it for $5,000.Over the years,she paid a total of $5,800 on auto insurance,$4,800 on gas and maintenance,and $2,500 in interest.What was her depreciation cost on this vehicle?

Accepted Answer

A)  $ 5,000 
B)  $10,800 
C)  $15,000 
D)  $20,000 
E)  $25,000

Question 11

When you receive title to an individual unit and joint ownership of any common areas and facilities,you have purchased a

Accepted Answer

A)  single family home. 
B)  cooperative. 
C)  condominium. 
D)  row house. 
E)  mobile home.

Question 12

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Using an FHA mortgage to finance your home would require a [lower | higher] down payment than a conventional loan.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 13

A real estate sales contract contains the terms and provisions which establish the sale's transaction.

Accepted Answer

A) True 
 B)False

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The term condominium/townhome refers to a type of [architecture | ownership].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 15

The term condominium refers to a style of architecture.

Accepted Answer

A) True 
 B)False

Question 16

A closed-end automobile lease is the most popular type of lease.

Accepted Answer

A) True 
 B)False

Question 17

Barb and Bob want to purchase a new home but don't know how much mortgage they can qualify for.The lender requires total installment loan payments not exceed 35% of gross monthly income.Based on Barb and Bob's financial data below,what is the maximum monthly mortgage payment for which they can qualify?

Accepted Answer

A)  $1,400 
B)  $1,208 
C)  $1,050 
D)  $ 850 
E)  $ 500

Question 18

The first choice in housing in the United States is

Accepted Answer

A)  single-family home. 
B)  condominium. 
C)  cooperative apartment. 
D)  manufactured home. 
E)  rental apartment.

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-The purchase price of the house you are buying is $180,000.A loan-to-value ratio of 90% will produce a mortgage amount of [$162,000 | $180,000].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the

Question 20

An adjustable rate mortgage with a baseline rate of 4%,a margin of 1%,and an annual cap of 1% would have an initial mortgage rate no higher than 6%.

Accepted Answer

A) True 
 B)False

Exam 5: Making Automobile and Housing Decisions

Other factors being equal,fixed-rate mortgages will have higher interest rates initially than adjustable-rate mortgages.

The greatest fixed cost involved with owning an automobile is usually the monthly loan payments.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -You are paying on a car loan,a furniture loan,and a student loan.This will have [an | no] effect on the lender's decision to grant you a mortgage loan.

Which of the following is true regarding cooperative apartments?

Mike (age 40) is purchasing his second home for $200,000 with a 25% down payment.He will withdraw some of the down payment from his IRA.He will have to pay ____ on the IRA withdrawal.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -With a(n) [closed-end | open-end] lease,one owes more at the end of the lease if the car is worth less than its projected value at the end of the lease.

The sales contract on an automobile purchase contractually binds you to purchase the car at the price you offered in the contract.

Patrick would like to know the monthly payments and the total finance charges on the following 2 loans:

The FHA ____ high loan-to-value ratio mortgages.

Anna purchased a vehicle six years ago for $25,000.She recently sold it for $5,000.Over the years,she paid a total of $5,800 on auto insurance,$4,800 on gas and maintenance,and $2,500 in interest.What was her depreciation cost on this vehicle?

When you receive title to an individual unit and joint ownership of any common areas and facilities,you have purchased a

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Using an FHA mortgage to finance your home would require a [lower | higher] down payment than a conventional loan.

A real estate sales contract contains the terms and provisions which establish the sale's transaction.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The term condominium/townhome refers to a type of [architecture | ownership].

The term condominium refers to a style of architecture.

A closed-end automobile lease is the most popular type of lease.

The first choice in housing in the United States is

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -The purchase price of the house you are buying is $180,000.A loan-to-value ratio of 90% will produce a mortgage amount of [$162,000 | $180,000].

An adjustable rate mortgage with a baseline rate of 4%,a margin of 1%,and an annual cap of 1% would have an initial mortgage rate no higher than 6%.