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Mortgages Pratice/Quiz
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Shauna wants to buy a house and plans to rent the apartment located in the basement for extra income. The house has a purchase price of $195,600 and she will make a 5% down payment. Shauna has qualified for a 30 year mortgage with a fixed rate of 5.875%. Approximately how much rent should she charge for the apartment in order to cover her monthly mortgage payment if she only wants to spend $400 a month of her own money?
a.
$300
b.
$700
c.
$1100
d.
$1150
B
Tyrell bought a house for $186,500. He has a 30 year mortgage with a fixed rate of 6.5%. Tyrell's monthly payments are $1,060.93. How much was Tyrell's down payment?
a.
$12,120
b.
$18,650
c.
$27,975
d.
$37,300
B
If the purchase price for a house is $345,000, what is the monthly payment if you put 10% down for a 30 year loan with a fixed rate of 6.375%?
a.
$1,569.27
b.
$1,937.12
c.
$2,152.35
d.
$3,314.59
B
Theresa is buying a condo that costs $127,500. She has $8,300 in savings and earns $3,200 a month. Theresa would like to spend no more than 20% of her income on her mortgage payment. Which loan option would you recommend to Theresa?
a.
30 year fixed, 6.5% down at a fixed rate of 5%
b.
30 year FHA, 3.5% down at a fixed rate of 6.5%
c.
30 year fixed, 5% down at a fixed rate of 6.25%
d.
30 year fixed, 10% down at a fixed rate of 5.75%
A
The Johnsons are buying a house that costs $210,000 and can afford a 20% down payment. If the Johnsons want the lowest monthly payment, which loan option would you recommend?
a.
30 year FHA, 3.5% down at a fixed rate of 6.25%
b.
30 year fixed, 20% down at a fixed rate of 6%
c.
30 year fixed, 10% down at a fixed rate of 6%
d.
15 year fixed, 20% down at a fixed rate 5.5%
B
Julio just bought a $267,900 house. He had a 20 year mortgage with a fixed rate of 5.875%. Julio's monthly payments are $1,558.09. What percent of the purchase price was Julio's down payment?
a.
13%
b.
15%
c.
18%
d.
20%
C
Which of the following is not a component of a mortgage payment?
a.
principal
b.
interest
c.
taxes
d.
down payment
D
What is the portion of a home's purchase price paid in cash and is not part of the mortgage loan?
a.
principal
b.
insurance
c.
taxes
d.
down payment
D
Nick found his dream home that has a purchase price of $192,000. Nick earns $3,325 a month and wants to spend no more than 30% of his income on his mortgage payment. He has saved up $35,000 for a down payment. Nick is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%. What modification can be made to this loan to make it a viable option, given Nick's situation?
a.
Change to a 15 year fixed loan
b.
Change the interest to 6%
c.
Change the down payment to 18% down
d.
None. This is a viable option for Nick.
C
Explain how the amount of a down payment affects your monthly mortgage payments.
The more money you put down, the smaller your principal value becomes. Having a smaller principal value will make your monthly payments smaller.
Which of the following statements is true?
a.
A 30 year fixed mortgage will always result in the lowest payment.
b.
You must have at least a 20% down payment to get a competitive interest rate.
c.
The lower your interest rate is, the lower your monthly payments are.
d.
The faster you pay off your mortgage, the lower your monthly payments are.
C
What may be a concern if you have an adjustable rate mortgage (ARM)?
a.
After the initial fixed rate period, your rate may increase.
b.
Your payment will constantly change during your initial fixed rate period.
c.
After the initial fixed rate period, your rate may decrease.
d.
A portion of your rate pays the commission of your mortgage broker.
A
Peter wants to buy a duplex with a purchase price of $226,950. Peter can afford a 10% down payment. Peter earns $2,985 a month and wants to spend no more than 10% of his income on his mortgage payment. Peter is going to rent out the other half of the duplex. He thinks that if he charges $900 a month in rent this will cover the remainder of his mortgage payment. Given that Peter has a 30 year mortgage with a fixed rate of 6.25%, how should Peter adjust how much he charges for rent of the other half of the duplex?
a.
Peter should increase the rent by $200.
b.
Peter should increase the rent by $60.
c.
Peter should increase the rent by $10.
d.
Peter should keep the rent at $900.
B
The Williams are buying a house that costs $323,000 and can afford a 10% down payment. If the Williams want the lowest monthly payment, which loan option would you recommend?
a.
15 year fixed, 5% down at a fixed rate of 5.5%
b.
30 year FHA, 3.5% down at a fixed rate of 6.25%
c.
30 year fixed, 20% down at a fixed rate of 5.75%
d.
30 year fixed, 10% down at a fixed rate of 6%
D
Which of the following statements is true.
I. The higher your interest rate, the higher your monthly mortgage payments.
II. The higher your down payment, the higher your monthly mortgage payments.
III. A 30 year mortgage fixed at 6% will have smaller payments that a 20 year mortgage fixed at 6%.
a.
I only
b.
II only
c.
I, II, and III
d.
I and III
D
Housing expenses are commonly referred to as PITI. What does PITI stand for?
a.
principal, income, taxes, investment
b.
payment, investment, terms, insurance
c.
payment, interest, terms, income
d.
principal, interest, taxes, insurance
D
Why does it take 30 years to pay off $150,000 loan, even though you pay $1000 a month?
a.
Sales tax is really high for home mortgages, and that is why monthly payments are much higher than just paying off principal.
b.
Banks trick investors into paying more money monthly so they can pocket the rest.
c.
Most home owners are expected to miss about half of their payments, so banks take this into account when determining the term of the loan.
d.
Even though the principal would be paid off in just over 10 years, it costs the bank a lot of money fund the loan. The rest of the loan is paid out in interest.
D
If the purchase price for a house is $445,500, what is the monthly payment if you put 5% down for a 30 year loan with a fixed rate of 6.25%?
a.
$2,740.19
b.
$2,605.87
c.
$1,314.84
d.
$1,249.10
B
Giselle wants to buy a condo that has a purchase price of $163,000. Giselle earns $2,986 a month and wants to spend no more than 25% of her income on her mortgage payment. She has saved up $33,000 for a down payment. Giselle is considering the following loan option: 20% down, 30 year at a fixed rate of 6.25%. What modification can be made to this loan to make it a viable option, given Giselle's situation?
a.
Change to a 15 year fixed loan
b.
Change the interest to 5.5%
c.
Change the down payment to 18% down
d.
None. This is a viable option for Giselle.
B
Vanessa bought a house for $268,500. She has a 30 year mortgage with a fixed rate of 6.25%. Vanessa's monthly payments are $1,595.85. How much was Vanessa's down payment?
a.
$9,314.45
b.
$16,781.25
c.
$40,275.00
d.
$53,040.00
A
If the purchase price for a house is $309,900, what is the monthly payment if you put 20% down for a 30 year loan with a fixed rate of 6%?
a.
$729.98
b.
$912.48
c.
$1,486.41
d.
$1,858.01
NOT C
If the purchase price for a house is $218,500, what is the monthly payment if you put 3.5% down for a 30 year loan with a fixed rate of 6.5%?
a.
$1,332.73
b.
$1,378.19
c.
$1,247.54
d.
$646.40
A
Karina bought a townhouse for $199,900. She has a 30 year mortgage with a fixed rate of 5.5%. Karina's monthly payments are $998.08. What percent of the purchase price was Karina's down payment?
a.
7%
b.
12%
c.
15%
d.
18%
B
Which term is defined as a fee charged for the use of money?
a.
interest
b.
down payment
c.
principal
d.
default
A
Which of these statements is most accurate regarding mortgage payments through the life of your loan?
a.
At the beginning of your loan, your payments are covering mostly interest. At the end of your loan, your payments are covering mostly principal.
b.
The amount for your mortgage payments will decline over the life of your loan.
c.
The amount of interest paid per mortgage payment will remain the same over the life of your loan.
d.
The amount of principal paid per mortgage payment will decrease over the life of your loan.
A
Eli is buying a townhouse that costs $276,650. He has $28,000 in savings and earns $4,475 a month. Eli would like to spend no more than 30% of his income on his mortgage payment. Which loan option would you recommend to Eli?
a.
30 year FHA, 3.5% down at a fixed rate of 6.5%
b.
30 year fixed, 5% down at a fixed rate of 6.25%
c.
30 year fixed, 6.5% down at a fixed rate of 5.75%
d.
30 year fixed, 10% down at a fixed rate of 5%
D
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