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Exam 9: The Housing Decision: Factors and Finances

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Question 51

Multiple Choice

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Todd Foley is applying for a $100,000 mortgage. He can select either a $600 monthly payment with no points or a $520 payment with two points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?

A) 6
B) 10
C) 18
D) 25
E) 48

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Question 52

Multiple Choice

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A possible disadvantage of FHA and VA mortgages can be:

A) higher debt ratios for buyers.
B) a longer processing time.
C) loans may be assumable.
D) the monthly payments can be higher than those of other mortgages.
E) the high down payment requirements.

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Question 53

Multiple Choice

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Some real estate experts estimate that remodeling a kitchen can add 130 percent of the cost of remodeling to the value of the house. A remodeled kitchen costing $8,000 could add _____ to the value of the house.

Which of the following would increase the amount that a person could afford to spend on a home?

Paula has completed a mortgage application and provided evidence of employment, income, and existing debt to the potential lending institution. Although Paula has not even begun the process of looking at possible homes to buy, she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage. In what stage of the application process is she?

The purpose of title insurance is to:

Explain what amortization is and how a down payment and loan duration impact it.

Duane Miller wants to know what price home he can afford. His annual gross income is $60,000. He has no other debt expenses and expects property taxes and insurance to cost $400 per month. He knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. He expects to make a 10% down payment. What is Duane's affordable home purchase price? Round your answer to the nearest $100.

Which document is used to transfer ownership of property from one party to another?

Explain how current interest rates can affect the price of a home.

An FHA-insured mortgage has less risk than a conventional mortgage for the financial institution.

What is the purpose of an escrow account and what costs are typically included?

Renting is more advantageous than buying a home when you are seeking:

A common opportunity cost associated with renting is interest lost on money spent for:

A home equity loan may also be referred to as a ____________ mortgage.

A cost associated with renting would be:

Gary Smith is purchasing one living unit in a building. What type of housing is Gary most likely going to live in?

Which one of the following is an advantage of buying?

Most people select a place of residence based on available financial resources, needs, and lifestyle.