Question 1

If a person chooses to purchase a more expensive home,he or she may have to cut expenses in other areas such as entertainment.

Accepted Answer

A) True 
 B)False

Question 2

A ________ is responsible for determining the value of the home as part of the loan process.

Accepted Answer

A)   banker
B)   loan officer
C)   real estate appraiser
D)   real estate agent

Question 3

The initial rate on an ARM will typically be

Accepted Answer

A)   relatively low, which benefits the homeowner.
B)   relatively high to allow the bank to recoup costs.
C)   about the same as a fixed rate loan on the same maturity.
D)   set by state law.

Question 4

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing,how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

Accepted Answer

A)   Five months
B)   Seven months
C)   Eighteen months
D)   The maturity of the loan

Question 5

Most home purchases are made initially

Accepted Answer

A)   with payments by personal check.
B)   with a 10 to 20% down payment and a mortgage.
C)   with a 5% down payment.
D)   with no down payment.

Question 6

Which of the following costs associated with home ownership is hardest to budget?

Accepted Answer

A)   Insurance
B)   Taxes
C)   Repairs
D)   Mortgage payments

Question 7

The first step in the home-buying process should be to

Accepted Answer

A)   identify the specific home you want to purchase.
B)   determine a realistic price range of homes you can afford.
C)   compare the cost of buying to renting.
D)   find a good real estate broker.

Question 8

Renting is almost always a better financial option since owning a home has so many costs such as maintenance,insurance,and taxes.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about interest-only mortgages is not true?

Accepted Answer

A)   Interest-only mortgages cannot be Qualified Mortgages under The Consumer Financial Protection Bureau's rules.
B)   Mortgage payments may increase abruptly.
C)   Interest-only mortgages allow the borrower to pay only interest for the life of the mortgage.
D)   Interest-only mortgages were popular before the financial crisis.

Question 10

During a period when interest rates are very low by historical standards and are expected to increase substantially over time,individuals should choose

Accepted Answer

A)   an ARM with a rate that adjusts after three years.
B)   a fixed-rate mortgage.
C)   an ARM that adjusts after one year.
D)   an ARM with a rate that adjusts every year for five years and then converts to a fixed rate.

Question 11

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Accepted Answer

A)   insurance account.
B)   appraisal account.
C)   escrow account.
D)   default prevention account.

Question 12

Your home value is likely to be higher with all of the following,except

Accepted Answer

A)   being close to a school.
B)   having a convenient location.
C)   being in an area that has just been zoned for industrial use.
D)   being in an area where a large retail business has just moved in.

Question 13

When purchasing a home,which of the following costs will you not incur?

Accepted Answer

A)   Origination fee
B)   Real estate agent's commission
C)   Application fee
D)   Appraisal fee

Question 14

Tiffany and Jason want to obtain a $72,000 mortgage.Their payments would be $730 for a 15-year mortgage and $579 for a 30-year mortgage.What would be their total savings in interest by using a 15-year mortgage?

Accepted Answer

A)   $27,180
B)   $54,360
C)   $77,040
D)   $131,400

Question 15

Homes near areas that have just been zoned for industrial use become more valuable.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of private mortgage insurance?

Accepted Answer

A)   It generally is required if the borrower makes a down payment of less than 20%.
B)   It costs $20 to $25 per year.
C)   It protects the borrower in the event that the lender goes bankrupt.
D)   It is another name for title insurance.

Question 17

Online real estate services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

Accepted Answer

A) True 
 B)False

Question 18

The total cost of owning a home versus renting is calculated by

Accepted Answer

A)   adding up the repair and maintenance expenses associated with the home.
B)   subtracting the tax savings from the mortgage interest expense and taxes.
C)   subtracting the expected value of the equity of the home at the end of the period.
D)   All of the above.

Question 19

The type of mortgage that is usually the shortest term and will require further action at the end of it is a(n)

Accepted Answer

A)   graduated payment mortgage.
B)   balloon payment mortgage.
C)   adjustable rate mortgage.
D)   fixed rate mortgage.

Question 20

In negotiating a price for the purchase of a home,you should do all of the following,except

Accepted Answer

A)   offer the highest price you can afford first to get the purchase settled quickly.
B)   write up a contract.
C)   assess how market conditions affect the value of the home.
D)   understand that real estate agents are brokers between the buyer and seller.

Exam 10: Purchasing and Financing a Home

Tiffany and Jason want to obtain a $72,000 mortgage.Their payments would be $730 for a 15-year mortgage and $579 for a 30-year mortgage.What would be their total savings in interest by using a 15-year mortgage?

Correct AnswerverifiedShow Answer

Homes near areas that have just been zoned for industrial use become more valuable.

Correct AnswerverifiedShow Answer

When purchasing a home,which of the following costs will you not incur?

Correct AnswerverifiedShow Answer

Most home purchases are made initially

Correct AnswerverifiedShow Answer

A ________ is responsible for determining the value of the home as part of the loan process.

Correct AnswerverifiedShow Answer

The total cost of owning a home versus renting is calculated by

Correct AnswerverifiedShow Answer

Which of the following statements about interest-only mortgages is not true?

Correct AnswerverifiedShow Answer

In negotiating a price for the purchase of a home,you should do all of the following,except

Correct AnswerverifiedShow Answer

Renting is almost always a better financial option since owning a home has so many costs such as maintenance,insurance,and taxes.

Correct AnswerverifiedShow Answer

Your home value is likely to be higher with all of the following,except

Correct AnswerverifiedShow Answer

During a period when interest rates are very low by historical standards and are expected to increase substantially over time,individuals should choose

Correct AnswerverifiedShow Answer

The initial rate on an ARM will typically be

Correct AnswerverifiedShow Answer

The first step in the home-buying process should be to

Correct AnswerverifiedShow Answer

If you obtain an FHA or VA loan you will make additional payments each month to cover your home insurance and property taxes that will be placed in an account called a(n)

Correct AnswerverifiedShow Answer

Which of the following costs associated with home ownership is hardest to budget?

Correct AnswerverifiedShow Answer

The type of mortgage that is usually the shortest term and will require further action at the end of it is a(n)

Correct AnswerverifiedShow Answer

Online real estate services are more convenient,but usually charge higher commissions than traditional full-service real estate companies.

Correct AnswerverifiedShow Answer

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing,how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

Correct AnswerverifiedShow Answer

If a person chooses to purchase a more expensive home,he or she may have to cut expenses in other areas such as entertainment.

Correct AnswerverifiedShow Answer

Which of the following is true of private mortgage insurance?

Correct AnswerverifiedShow Answer

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