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Chapter 7: The Home and Automobile Decision

Terms in this set (26)

When you begin researching which vehicle to purchase you need to first determine:
how much you can realistically afford to pay.
The first step in being a smart buyer is to:
differentiate wants from needs.
Jennifer is considering buying a $6,500 used car from a local car lot that has internal financing. How much will her payment be if she puts $500 down and finances the remainder at 4% for 18 months?
$343.98
Condominiums and co-ops offer:
shared amenities.
An apartment building owned by a corporation in which the stockholders are the building's residents is called a:
cooperative.
Which of these is an advantage of renting a home over buying a home?
Renters have greater mobility
A type of lease that allows you to return the vehicle in good condition at the end of the lease term with no additional financial responsibility is called a(n):
walk-away lease.
An initial low rate charged on an ARM is often called a(n):
teaser rate.
Lenders require that the property's value be determined by an expert known as a(n):
property appraiser.
Traditional mortgages typically require a down payment that is __________ of the value of the home.
20%
One of the most important financial factors that will determine the ease with which you obtain a mortgage is your:
credit score.
Jerry's loan officer told him he could buy his mortgage rate down to 5.5% if he paid 2 points. How much will that option cost Jerry on a $165,000 mortgage?
$3,300;
Points are a one-time up front interest charge used by some lenders. One point is equal to one percent of the loan amount so $165,000 x .02 = $3,300. Points are commonly used as an option to lower your interest rate.
In general, lenders like to see a PITI-to-monthly gross income ratio:
below 28%;
This ratio represents the percentage of your income devoted to housing costs.
Which of these is not a one-time cost associated with obtaining a mortgage?
Private mortgage insurance
When you have a complaint regarding a recent purchase you should contact the company that sold you the product:
in writing.
An interest only mortgage might be attractive to a buyer that:
expects to move in a few years.
PITI is an acronym that stands for:
Principal, interest, taxes and insurance
A(n) __________ loan is one that can be transferred to another buyer who simply takes over the existing payments.
assumable
Which of these is a good source of information for new and used car values?
Kelley Blue Book
__________ leases require a vehicle appraisal at the end of the lease.
Open-end
Auto manufacturers often give auto dealers a sum of money after an auto sells. This sum is typically 2 or 3 percent of the selling price and is known as a:
holdback
A loan that is collateralized by the property being purchased is known as a:
conventional mortgage.
Mark is considering buying a new sports car that will have a monthly payment that stretches his budget to the limit. What advice would you give him before he makes the purchase?
Price the cost of insuring the sports car.
Part of being a smart buyer is to:
not succumb to high pressure sales tactics.
A payment cap on an adjustable rate mortgage can result in a situation where the outstanding balance of your mortgage is increasing. This situation is known as:
negative amortization.
An account established where funds are deposited to pay taxes and insurance on a typical mortgage is known as a(n):
escrow account.
THIS SET IS OFTEN IN FOLDERS WITH...