Question 1

Closing costs are the fees and charges owed when making the decision to refinance a home.

Accepted Answer

A) True 
 B)False

Question 2

Assuming semi-annual compounding and a quoted mortgage rate of 9 percent, what are the effective annual rate and the effective monthly rate?

Accepted Answer

A)  4.5 percent, 1 percent
B)  9 percent, 0.75 percent
C)  9.2 percent, 0.736 percent
D)  18.81 percent, 0.75 percent
E)  18.81 percent.0.736 percentF) A) and E)
G) A) and D)

Question 3

The amount of the down payment will affect the amount of mortgage a person can afford.

Accepted Answer

A) True 
 B)False

Question 4

A cost associated with home buying would be

Accepted Answer

A)  appraisal.
B)  home inspection.
C)  property appraisal.
D)  land transfer tax.
E)  all are cost associated with buying a house.F) A) and D)
G) A) and C)

Question 5

Amortization refers to changes in the monthly payment for a variable rate mortgage.

Accepted Answer

A) True 
 B)False

Question 6

Step four of the home buying process is?

Accepted Answer

A)  Determine home ownership needs
B)  Find and evaluate a property to purchase
C)  Price the property
D)  Obtain Financing
E)  Close the purchase transactionF) B) and E)
G) C) and E)

Question 7

Prepaid property tax and utility adjustments typically costs (for the purchase of a home) ?

Accepted Answer

A)  $200-300
B)  $750-1000
C)  $400-1500
D)  $500-2000
E)  $2,000F) B) and E)
G) A) and B)

Question 8

Belinda Williams plans to rent instead of buying her house.What advantage of renting will Belinda encounter?

Accepted Answer

A)  tax advantages
B)  financial benefits
C)  community pride
D)  lower initial costs
E)  home improvement flexibilityF) B) and C)
G) A) and D)

Question 9

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

Accepted Answer

A)  lower financial obligations
B)  increased interest rates
C)  increased down payment
D)  decreased family income
E)  increased monthly living expensesF) A) and D)
G) A) and E)

Question 10

Step one of the home buying process is?

Accepted Answer

A)  Determine home ownership needs
B)  Find and evaluate a property to purchase
C)  Price the property
D)  Obtain Financing
E)  Close the purchase transactionF) A) and B)
G) B) and E)

Question 11

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

Accepted Answer

A)  higher financial obligations
B)  decreased interest rates
C)  increased down payment
D)  decreased family income
E)  increased monthly living expensesF) B) and C)
G) A) and C)

Question 12

A cooperative housing arrangement involves

Accepted Answer

A)  government-supported rental units.
B)  a nonprofit organization.
C)  individual ownership of a living unit in a building.
D)  factory built and on-site assembly.
E)  housing units owned by a real estate developer.F) D) and E)
G) C) and D)

Question 13

Which of the following expenses is paid from an escrow account?

Accepted Answer

A)  title insurance
B)  property insurance
C)  points
D)  loan application fee
E)  real estate agent's commissionF) B) and E)
G) A) and B)

Question 14

Current interest rates can affect the price of a home.

Accepted Answer

A) True 
 B)False

Question 15

Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement.

Accepted Answer

A) True 
 B)False

Question 16

The purpose of zoning laws is to

Accepted Answer

A)  restrictions on property use.
B)  encourage new housing development.
C)  minimize people moving from an area.
D)  reduce real estate property taxes.
E)  assist real estate agents in finding homes for sale.F) C) and E)
G) All of the above

Question 17

The sub-prime mortgage crisis in 2007 was caused by

Accepted Answer

A)  a housing bubble
B)  excessive risk taking by lenders and investors
C)  loose lending practices
D)  low interest rates
E)  all four factors contributedF) B) and C)
G) All of the above

Question 18

Which of the following would increase the speed of equity growth for a homebuyer?

Accepted Answer

A)  making a down payment of 10 percent instead of 20 percent
B)  obtaining a mortgage interest rate of 9 percent instead of 8 percent
C)  obtaining a 20-year mortgage instead of a 25-year mortgage
D)  making larger deposits to the escrow account
E)  making smaller deposit to the escrow accountF) C) and E)
G) B) and E)

Question 19

The purpose of a counteroffer is to

Accepted Answer

A)  negotiate the purchase price.
B)  reduce mortgage payments.
C)  lower real estate property taxes.
D)  avoid paying points at closing.
E)  avoid paying the real estate agent's commission.F) A) and B)
G) B) and C)

Question 20

Renting would be most appropriate for people who

Accepted Answer

A)  have limited funds currently available.
B)  have difficulty establishing credit.
C)  want to reduce their taxes.
D)  enjoy remodeling their residence.
E)  desire the financial benefits of increased equity.F) D) and E)
G) A) and E)

Exam 7: The Finances of Housing

Variable rate mortgages with a rate cap prevent the borrower from having to pay an interest rate significantly higher than the one in the original agreement.

Correct AnswerverifiedShow Answer

A cooperative housing arrangement involves

Correct AnswerverifiedShow Answer

Which of the following would increase the speed of equity growth for a homebuyer?

Correct AnswerverifiedShow Answer

Renting would be most appropriate for people who

Correct AnswerverifiedShow Answer

Amortization refers to changes in the monthly payment for a variable rate mortgage.

Correct AnswerverifiedShow Answer

Which of the following expenses is paid from an escrow account?

Correct AnswerverifiedShow Answer

The sub-prime mortgage crisis in 2007 was caused by

Correct AnswerverifiedShow Answer

Closing costs are the fees and charges owed when making the decision to refinance a home.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Belinda Williams plans to rent instead of buying her house.What advantage of renting will Belinda encounter?

Correct AnswerverifiedShow Answer

Current interest rates can affect the price of a home.

Correct AnswerverifiedShow Answer

A cost associated with home buying would be

Correct AnswerverifiedShow Answer

Assuming semi-annual compounding and a quoted mortgage rate of 9 percent, what are the effective annual rate and the effective monthly rate?

Correct AnswerverifiedShow Answer

Step four of the home buying process is?

Correct AnswerverifiedShow Answer

Prepaid property tax and utility adjustments typically costs (for the purchase of a home) ?

Correct AnswerverifiedShow Answer

The purpose of a counteroffer is to

Correct AnswerverifiedShow Answer

The purpose of zoning laws is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Step one of the home buying process is?

Correct AnswerverifiedShow Answer

The amount of the down payment will affect the amount of mortgage a person can afford.

Correct AnswerverifiedShow Answer

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