61 terms

PF Ch. 7 Mult. Choice ?'s

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Which of the following is NOT correct?
a. Renting is usually less expensive in the short run
b. Home ownership usually has long-term financial advantages
c. Lifestyle and financial factors should be analyzed to determine if you should rent or buy.
d. Traditional financial guidelines suggest that your home should cost about 5 times your annual income
e. Renting is temporary
Traditional financial guidelines suggest that your home should cost about 5 times your annual income
Which of the following is a disadvantage of renting?
a. Renters have fewer responsibilities than homeowners
b. Tenants cannot take tax deductions for mortgage interest and property taxes
c. Renters usually do not have to be concerned with maintenance and repairs
d. Taking possession of a rental until is less expensive than buying a home
e. Renting can be more convenient for those who move frequently
Tenants cannot take tax deductions for mortgage interest and property taxes
Which of the following is an advantage of renting?
a. Noise from parties may be monitored closely
b. Renters have fewer responsibilities than homeowners
c. Tenants cannot take tax deductions for mortgage interest and property taxes
d. Tenants may be subject to restrictions regarding decorating
e. All of these are advantages or renting
Renters have fewer responsibilities than homeowners
Most tenants sign a lease. Which of the following is part of a lease agreement?
a. The amount of the down payment
b. The conditions under which the landlord may enter the apartment
c. The interest rate for a lease loan
d. The name and address of the buyer
e. The sale date
The conditions under which the landlord may enter the apartment
The opportunity to have another person take over rent payments and live in the rental unit is called a:
a. Lease
b. Lessee
c. Lessor
d. Rental agreement
e. Sublease
Sublease
A legal document that includes information about the due date of monthly rent is called a:
a. Lease
b. Lessee
c. Lessor
d. Rental statement
e. Sublease
Lease
The owner/landlord is known as the:
a. Lease
b. Lessee
c. Lessor
d. Renter
e. Sublease
Lessor
The tenant is the:
a. Lease
b. Lessee
c. Lessor
d. Owner
e. Sublease
Lessee
This provides the tenant protection from rent increase:
a. Lease
b. Lessee
c. Lessor
d. Rental statement
e. Sublease
Lease
This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property:
a. Lease
b. Lessee
c. Lessor
d. Rental statement
e. Sublease
Lease
Which of the following expenses is NOT usually recommended or necessary for a tenant?
a. Security deposit
b. Utilities
c. Insurance
d. All of the above are expected
e. None of the above are expected
All of the above are expected
Which of the following is NOT a benefit of home ownership?
a. Stability of residence
b. Personalized living location
c. Deductibility of mortgage interest
d. Deductibility of real estate taxes
e. Maintenance and costs of repairs and home improvements
Maintenance and costs of repairs and home improvements
Donald wanted to buy a house in the country, so he sought the advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he did have some information incorrect. Which of the following is incorrect?
a. An advantage is that Donald can deduct mortgage interest and real estate taxes.
b. A disadvantage is that Donal is responsible for maintenance and costs of repairs and home improvements
c. An advantage is that the down payment required is less than the security deposit for a rental
d. A disadvantage is that real estate taxes are a major expense for homeowners
e. An advantage is that Donald can paint his house bright purple withe green trim to match his college's colors
An advantage is that the down payment required is less than the security deposit for a rental
Which of the following is a legal form of ownership where the owners pay a monthly fee for maintenance of the common areas?
a. Condominium
b. Cooperative housing
c. Manufactured home
d. Single-family dwelling
e. Townhouse
Condominium
Which of the following is a form of housing in which the units are owned by a nonprofit organization?
a. Condominium
b. Cooperative housing
c. Manufactured home
d. Single-family dwelling
e. Townhouse
Cooperative housing
Which of the following is a form of housing in which shareholders purchase stock to obtain the right to live in a unit of the building?
a. Condominium
b. Cooperative housing
c. Manufactured home
d. Single-family dwelling
e. Townhouse
Cooperative housing
Diane purchased her house and had it assembled before it was moved to her lot. She purchased a _______,
a. Condominium
b. Cooperative housing
c. Manufactured home
d. Single-family dwelling
e. Townhouse
Manufactured home
Elaine purchased her living unit in a building with 5 other separate units. She purchased a ______.
a. Condominium
b. Cooperative housing
c. Manufactured home
d. Single-family dwelling
e. Townhouse
Townhouse
Paul and Lora built their home. When they researched contractors they paid attention to all of the following except:
a. Contractor's reputation and experience
b. Contractor's relationship with suppliers and subcontractors
c. Payment arrangements during construction
d. Time and payment schedule
e. Contractor's property tax payments during construction
Contractor's property tax payments during construction
Frank and Diane wanted to buy a house. Which of the following do they need before they purchase a house?
a. Down payment
b. Homeowner's insurance
c. Mortgage interest
d. Mortgage principal
e. Real estate taxes
Down payment
Georgina and Henry are looking at houses. Which of the following is correct?
a. A "handyman's special" will be set at a higher price than one that is in "move in condition".
b. They should assess the school system in the area they want to live
c. The amount they can afford for housing will be primarily determined by the down payment
d. Their first house should be their "dream house"
e. All of the above are correct
They should assess the school system in the area they want to live
What should a home-buyer consider when evaluating a house?
a. Zoning laws
b. Location of businesses and future construction projects
c. School system
d. Property values of the community
e. All of the above should be evaluated
All of the above should be evaluated
When Ingrid was selling her house, she contacted Gabe, her real estate agent, to help her with the sale. Gabe's services include all except:
a. Negotiating a settlement price
b. Receiving an offer from a buyer
c. Representing Ingrid at the closing
d. Showing Ingrid's home to potential buyers
e. Working for the buyer
Working for the buyer
Jim wants to make an offer to buy an older house. At this point, he should:
a. Move into the house
b. Set up a home inspection
c. Contact the seller to purchase his lawn tools
d. Close the purchase transaction
e. Sign his mortgage papers
Set up a home inspection
Kelly selected a home and submitted an offer to the seller:
a. The seller must accept her offer
b. Her offer must have been for the asking price
c. The seller's price is affected by Kelly's need to buy
d. The seller may choose to provide a counteroffer
e. Kelly will receive earnest money when she present the offer
The seller may choose to provide a counteroffer
Madeline wants to purchase a larger house. However, she had not yet sold her current home. She may want to include a(n) ______ in her offer.
a. Appraisal
b. Contingency clause
c. Dual agent
d. Earnest money
e. Purchase agreement
Contingency clause
When Nancy buys her house, the mortgage company will probably conduct a(n):
a. Appraisal
b. Contingency clause
c. Dual agent
d. Earnest money
e. Purchase agreement
Appraisal
Opal is a real estate agent who represents the buyer as well as the seller. In some states, the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as a(n):
a. Appraisal
b. Contingency clause
c. Dual agent
d. Earnest money
e. Purchase agreement
Dual agent
Pauline just submitted an offer on her dream home. To show that she is serious, she also included ________.
a. Appraisal
b. Contingency clause
c. Dual agent
d. Earnest money
e. Purchase agreement
Earnest money
Private mortgage insurance:
a. Cannot be avoided
b. Is part of all mortgages
c. Is usually required if the down payment is less than 25 percent
d. Must be terminated automatically when the homeowner's equity reaches 22 percent of the property value when the loan was initiated
e. Protects the buyer from financial loss in the value of the home increases
Must be terminated automatically when the homeowner's equity reaches 22 percent of the property value when the loan was initiated
Major factors that affect the affordability of your mortgage include all except:
a. Amount available for a down payment
b. Current mortgage rates
c. Income
d. Length of loan
e. Size of home
Size of home
Quinn applied for a loan. He provided information about his finances and the home he plans to purchase. Results of the mortgage calculation include all except:
a. Expected maintenance costs
b. Home purchase price he can afford
c. Monthly mortgage payment he can afford
d. Mortgage amount he can afford
e. All are correct
Expected maintenance costs
Rebecca paid extra money to reduce her mortgage interest rate. The extra money is called:
a. Amortization
b. Escrow
c. Lock
d. PMI
e. Points
Points
Ricky has a conventional mortgage. He can monitor his interest and principal payments using ______.
a. Amortization
b. Escrow
c. Lock
d. PMI
e. Points
Amortization
When Smee applied for a loan, he was assured that his rate would not change if he closed within a specific time period. Smee had a _____.
a. Amortization
b. Escrow
c. Lock
d. PMI
e. Points
Lock
Trenton wants to buy a house, but can only provide a 10 percent down payment. He probably will be required to have ______.
a. Amortization
b. Escrow
c. Lock
d. PMI
e. Points
PMI
Since Dan served in the Army, he should be eligible for a(n):
a. ARM
b. FHA loan
c. Negative amortization
d. Payment cap
e. VA loan
VA loan
Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n):
a. ARM
b. FHA loan
c. Negative amortization
d. Payment cap
e. VA loan
ARM
Paul is 23 years old and has a small amount to use as a down payment for his first house. He might be eligible for a(n):
a. ARM
b. FHA loan
c. Negative amortization
d. Payment cap
e. VA loan
FHA loan
Veronica has had a variable-rate mortgage for several years. Unfortunately, the monthly payments have not covered her interest owed. As a result, her home equity is decreasing because of ________.
a. ARM
b. FHA loan
c. Negative amortization
d. Payment cap
e. VA loan
Negative amortization
Yvette has a flexible-rate mortgage that has a maximum monthly increase. This feature is called a(n):
a. ARM
b. FHA loan
c. Negative amortization
d. Payment cap
e. VA loan
Payment cap
If you have the option to change your adjustable-rate mortgage to a fixed-rate mortgage during a certain period, you have a(n):
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Convertible ARM
If you have a mortgage that has a large final payment, you have a(n):
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Balloon mortgage
If you have an interest rate subsidy from a home builder or real estate developer, you have a(n):
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Buy-down
If you have a mortgage that provides for increases in payments that allow the amount owed to be paid off more quickly, you have a(n):
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Growing-equity mortgage
If you do not pay back any of the loan amount for a portion of the loan period, you have a(n):
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Interest-only mortgage
Zelda is looking for a mortgage that will give her the option to change it to a fixed-rate mortgage. Which of the following will meet her criterion?:
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Convertible ARM
Andrew wants a loan that will allow him to pay back his 30-year mortgage in 15 to 18 years. His best choice is:
a. Balloon mortgage
b. Buy-down
c. Convertible ARM
d. Growing-equity mortgage
e. Interest-only mortgage
Growing-equity mortgage
The primary benefit of a home equity loan is:
a. Its limited availability
b. The deductibility of the loan interest on federal taxes
c. The required monthly payments
d. The use of the home as collateral for the loan
e. Two of the above are primary benefits
The deductibility of the loan interest on federal taxes
A reserve mortgage:
a. Is the same thing as a second mortgage
b. Offers a home buyer a home loan with a 30-year payment period
c. Provides older homeowners a loan that pays tax-free income and is repaid when the home is sold
d. Two of the above are correct
e. All of the above are correct
Provides older homeowners a loan that pays tax-free income and is repaid when the home is sold
During a home purchase closing, you should:
a. Order an appraisal
b. Pay all closing costs, settle last-minute items, and sign documents
c. Schedule an inspection of the condition of the home
d. Sign documents and pay half of the settlement costs
e. Review zoning laws for the municipality where the home is located
Pay all closing costs, settle last-minute items, and sign documents
Which of the following is the document that transfer ownership of property from one party to another?
a. Deed
b. Escrow
c. Mortgage
d. PMI
e. Points
Deed
Which of the following is an account used to pay property taxes and home insurance?
a. Deed
b. Escrow
c. Mortgage
d. PMI
e. Points
Escrow
Walt decided to sell the home he lived in for 50 years. The house has 2 bedrooms on the first floor, a finished basement, and a finished attic with a low ceiling. To prepare his home for sale, he should:
a. Exaggerate the size of his yard
b. Keep everything "as is"
c. List his house as a 3-bedroom
d. Take steps to make the house appear bright and large
e. Underestimate the cost of utilities
Take steps to make the house appear bright and large
Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except:
a. Current mortgage rates
b. Demand in the housing market
c. His original cost
d. Recent selling prices of comparable homes in the area
e. The appraised value of his home
His original cost
Which of the following is NOT correct?
a. Alex's daily maintenance and timely repairs around his home should increase his sale price
b. Brenda's new hot tub will not probably increase the selling price more than her recently added storage space
c. Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image
d. Darryl's decision to sell his house 'by owner' could save him several thousands of dollars
e. Eric's listing with a real estate agent will provide him with services such as advice on features of his home to highlight
Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image
Franklin wants to sell his house himself. Which of the following is NOT correct about his sale?
a. He should create a detailed information sheet and distribute it in stores and other public areas
b. He should plan to spend time and effort in the sales process
c. He should require potential buyers to provide names, addresses, telephone numbers and background information
d. He should show the house only when he is home alone
e. He should provide information about the availability of financing and financing requirements
He should show the house only when he is home alone
If you are selling your house by owner, you should still enlist the assistance of:
a. A real estate agent to help with the closing
b. A lawyer or title company to assist with the contract, closing, and other legal matters
c. Your brother-in-law to aid with legal issues of the sale
d. Two of the above are correct
e. All of the above are correct
A lawyer or title company to assist with the contract, closing, and other legal matters
Which of the following is NOT correct regarding real estate agents?
a. They can provide advice on feature of your home to highlight
b. They handle financial aspects on the sale
c. They may include a presentation of your home on various Web sites
d. They may screen potential buyers to determine they will qualify for a mortgage for your home
e. They require that you conduct your own showings
They require that you conduct your own showings
Given the information below, what is the total cost of renting per year?
- Annual rent payments $15,000
- Annual renter's insurance $275
- Annual interest lost on security deposit $10
- Value of apartment $150,000
a. $15,000
b. $15,275
c. $15,285
d. $165,275
e. $165,285
$15,285
Crystal is looking for a new apartment. What are her total annual costs associated with renting?
- Monthly renting payments $1,200
- Annual renter's insurance $250
- Annual interest lost on security deposit $10
- Value of apartment $150,000
a. $1,460
b. $14,400
c. $14,650
d. $14,660
e. $151,460
$14,660
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