Question 1

An FHA-insured mortgage has low down payment requirements and is fully assumable with no prepayment penalties.

Accepted Answer

A) True 
 B)False

Question 2

A newly married couple is having trouble affording a home.What type of mortgage arrangement would reduce the monthly payment as a result of an interest rate subsidy from a builder or real estate developer?

Accepted Answer

A)  FHA-insured loan
B)  Balloon mortgage
C)  Buy-down
D)  Shared-appreciation mortgage
E)  Growing-equity mortgageF) B) and C)
G) D) and E)

Question 3

A payment cap keeps the payments on an adjustable-rate mortgage at a given level or limits the amount to which those payments can rise.

Accepted Answer

A) True 
 B)False

Question 4

A VA-guaranteed loan program provides assistance to:

Accepted Answer

A)  armed services veterans.
B)  recent college graduates.
C)  low-income homebuyers.
D)  government employees.
E)  the elderly.F) All of the above
G) C) and D)

Question 5

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

Accepted Answer

A)  Title insurance
B)  Property taxes
C)  Points
D)  Loan application fee
E)  Real estate agent's commissionF) A) and E)
G) All of the above

Question 6

The Homeowners Protection Act requires that a PMI policy be terminated automatically when a homeowner's equity reaches _____ percent of the property value at the time the mortgage was executed.

Accepted Answer

A)  5
B)  9
C)  12
D)  18
E)  22F) None of the above
G) B) and E)

Question 7

What does it mean to sublet an apartment?

Accepted Answer

A)  Increase the rent
B)  Lower maintenance costs
C)  Convert the units to condominiums
D)  Meet certain government housing regulations
E)  Obtain another tenant to take over rent payments during the lease periodF) A) and D)
G) B) and C)

Question 8

A possible disadvantage of FHA and VA mortgages can be:

Accepted Answer

A)  higher debt ratios for buyers.
B)  a longer processing time due to a backlog of applications.
C)  loans may be assumable.
D)  the monthly payments will always be higher than those of other mortgages.
E)  the high down payment requirements.F) B) and E)
G) A) and B)

Question 9

A loan based on the high equity in a home that provides the homeowner with tax-free income and which is paid back when the home is sold is called a:

Accepted Answer

A)  conventional mortgage.
B)  growing equity mortgage.
C)  second mortgage.
D)  reverse mortgage.
E)  adjustable rate mortgage.F) A) and B)
G) A) and C)

Question 10

Which of the following is a form of housing in which the units in a building are owned by a nonprofit organization?

Accepted Answer

A)  Mobile home
B)  Condominium
C)  Cooperative housing
D)  Duplex
E)  TownhouseF) None of the above
G) A) and D)

Question 11

What is the affordable monthly mortgage payment if your monthly gross income is $60,000 and monthly payments on an auto loan are $400?

Accepted Answer

A)  $6,000
B)  $5,000
C)  $1,900
D)  $1,500
E)  $400F) A) and B)
G) B) and E)

Question 12

Most people do not select a place of residence based on:

Accepted Answer

A)  lifestyle.
B)  needs.
C)  financial resources.
D)  attitudes.
E)  credit score.F) None of the above
G) All of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The amount of mortgage a person is eligible for will be larger by:

Accepted Answer

A)  decreasing the value of the collateral.
B)  lowering the down payment.
C)  increasing other debt obligations.
D)  lowering the family's income.
E)  decreasing the interest rate.F) B) and E)
G) C) and E)

Question 15

What is the term used to describe the reduction of the balance owed on a loan with each payment made over a period of time?

Accepted Answer

A)  a buy-down.
B)  shared-appreciation.
C)  prepaid interest.
D)  amortization.
E)  a rate cap.F) A) and E)
G) B) and E)

Question 16

The legal document involved in renting an apartment is called a:

Accepted Answer

A)  service contract.
B)  mortgage.
C)  lease.
D)  security deposit.
E)  escrow account.F) None of the above
G) A) and B)

Question 17

Brett has hired a professional to assess the soundness of the roof,foundation,and building materials of a potential home he is considering.The professional will also be checking other aspects of the home including the plumbing,heating,and cooling systems.Brett is paying for a:

Accepted Answer

A)  walk-through.
B)  zoning evaluation.
C)  home inspection.
D)  title search.
E)  handyman's special.F) All of the above
G) A) and E)

Question 18

A lease provides protection to both the tenant and the landlord.

Accepted Answer

A) True 
 B)False

Question 19

Negotiating a purchase price for a home can involve an offer and a counteroffer.

Accepted Answer

A) True 
 B)False

Question 20

Real estate advisors suggest a price-to-rent ratio of 25 or lower when you buy to possibly avoid a lower home value after your purchase.

Accepted Answer

A) True 
 B)False

Exam 9: The Housing Decision: Factors and Finances

Which of the following is a form of housing in which the units in a building are owned by a nonprofit organization?

Correct AnswerverifiedShow Answer

A newly married couple is having trouble affording a home.What type of mortgage arrangement would reduce the monthly payment as a result of an interest rate subsidy from a builder or real estate developer?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An FHA-insured mortgage has low down payment requirements and is fully assumable with no prepayment penalties.

Correct AnswerverifiedShow Answer

A lease provides protection to both the tenant and the landlord.

Correct AnswerverifiedShow Answer

Negotiating a purchase price for a home can involve an offer and a counteroffer.

Correct AnswerverifiedShow Answer

A payment cap keeps the payments on an adjustable-rate mortgage at a given level or limits the amount to which those payments can rise.

Correct AnswerverifiedShow Answer

What is the affordable monthly mortgage payment if your monthly gross income is $60,000 and monthly payments on an auto loan are $400?

Correct AnswerverifiedShow Answer

The Homeowners Protection Act requires that a PMI policy be terminated automatically when a homeowner's equity reaches _____ percent of the property value at the time the mortgage was executed.

Correct AnswerverifiedShow Answer

A loan based on the high equity in a home that provides the homeowner with tax-free income and which is paid back when the home is sold is called a:

Correct AnswerverifiedShow Answer

Brett has hired a professional to assess the soundness of the roof,foundation,and building materials of a potential home he is considering.The professional will also be checking other aspects of the home including the plumbing,heating,and cooling systems.Brett is paying for a:

Correct AnswerverifiedShow Answer

A possible disadvantage of FHA and VA mortgages can be:

Correct AnswerverifiedShow Answer

The amount of mortgage a person is eligible for will be larger by:

Correct AnswerverifiedShow Answer

What does it mean to sublet an apartment?

Correct AnswerverifiedShow Answer

What is the term used to describe the reduction of the balance owed on a loan with each payment made over a period of time?

Correct AnswerverifiedShow Answer

The legal document involved in renting an apartment is called a:

Correct AnswerverifiedShow Answer

Most people do not select a place of residence based on:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Real estate advisors suggest a price-to-rent ratio of 25 or lower when you buy to possibly avoid a lower home value after your purchase.

Correct AnswerverifiedShow Answer

A VA-guaranteed loan program provides assistance to:

Correct AnswerverifiedShow Answer

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