U.E.T Taxila

COURSE TITLE : FREE 101

TRUE/FALSE QUESTIONS(1 TO 31)

Chapter 07

1)Your lifestyle affects your housing buying decisions.

2. Your decision to rent or to buy your residence should be based solely on lifestyle factors.

3. An advantage of renting is pride of ownership.

4. Angela wanted to rent an apartment, so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement.

5. ) A landlord has the right to sublet an apartment.

6. Lenny the landlord has the right to take legal action against Tina the tenant if she does not pay her rent on a timely basis.

7. When Brett's apartment lease ends, he should receive his entire security deposit back even though the carpet has been damaged while he was living there.

8. Rental insurance isn't very important since the landlord's insurance on the building includes coverage on all tenants' belongings.

9. A disadvantage of home ownership is the deductibility of mortgage interest and real estate tax payments.

10. A duplex is a house with two or more separate dwellings.

11. A condominium is a form of housing in which the units in a building are owned by a nonprofit organization.

12. A handyman's special is a home that needs work and is priced lower than homes in better condition.

13. When interest rates are high and the demand for homes is low, prices of homes will likely be at a premium.

14. Private mortgage insurance is usually required if the down payment for a home is less than 30 percent.

15. An approved mortgage application usually locks in an interest rate for 60 - 120 days.

16. As interest rates increase, more people have the ability to afford an average-priced home.

17. Mortgage points are paid at the end of the mortgage.

18. The most common conventional mortgage is the 20 year ARM.

19. Most new mortgages are assumable.

20. Merrill bought a house and applied for a loan through the VA (Veterans Administration). The VA will provide the down payment when he closes on the house.
21. Most low and middle income people will NOT qualify for a VA-guaranteed loan.

22. A balloon mortgage has fixed monthly payments for a period of time. At the end of that time, the entire principal balance must be paid in full.

23. An advantage of a second mortgage is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.

24. An advantage of a buy-down is that the interest rate subsidy from the home builder reduces the mortgage payments during the first few years of the loan.

25. If you pay an extra $100 per month on your mortgage, your total loan principal will decrease and your total interest will remain the same.

26. At the closing of a home purchase, the buyer conducts a walk-through of the property.

27. The purpose of an escrow account is to pay the points at closing.

28. Home improvements will definitely increase the selling price.

29. About 50 percent of home sales are By Owner.

30. A real estate agent can provide service to save you time and effort with selling your home.

31. If your home is assessed for $200,000, the market value of the home should be less than $200,000.

32. Which of the following is NOT correct?

33. Which of the following is a disadvantage of renting?

34. Which of the following is an advantage of renting?

35. Most tenants sign a lease. Which of the following is part of a lease agreement?

36. The opportunity to have another person take over rent payments and live in the rental unit is called a

37. A legal document that includes information about the due date of monthly rent is called a

38. The owner/landlord is known as the

39. The tenant is the

40. This provides the tenant protection from rent increases

41. This gives the landlord the right to take legal action against a tenant for nonpayment of rent or destruction of property.

42. Which of the following expenses is NOT usually recommended or necessary for a tenant?

43. Which of the following is NOT a benefit of home ownership?

44. 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?

45. Which of the following is a legal form of ownership where the owners pay a monthly fee for maintenance of the common areas?

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

47. 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?

48. Diane purchased her house and had it assembled before it was moved to her lot. She purchased a          

49. Elaine purchased her living unit in a building with 5 other separate units. She purchased a    

50. Paul and Lora built their home. When they researched contractors they paid attention

51. Frank and Diane wanted to buy a house. Which of the following do they need

before they purchase a house?

52. Georgina and Henry are looking at houses. Which of the following is correct?

53. What should a home buyer consider when evaluating a house?

54. 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

55. Jim wants to make an offer to buy an older house. At this point, he should

56. Kelly selected a home and submitted an offer to the seller.

57. 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.

58. When Nancy buys her house, the mortgage company will probably conduct a(n)

                      .

59. 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) .

60. Pauline just submitted an offer on her dream home. To show that she is serious, she also included .

61.  Private mortgage insurance

62. Major factors that affect the affordability of your mortgage include all except

63. 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

64. Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called

65. Ricky has a conventional mortgage. He can monitor his interest and principal payments using            

66. 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                                                                           .

67. Trenton wants to buy a house, but can only provide a 10 percent down payment. He probably will be required to have                                                                                                 .

68. Since Dan served in the Army, he should be eligible for a(n)                                                                                  

69. Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n)                                                                       

70. 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)                                                                                          

71. 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    

72. Yvette has a flexible-rate mortgage that has a maximum monthly increase. This feature is called a(n)  

73. If you have the option to change your adjustable-rate mortgage to a fixed-rate mortgage during a certain period, you have a(n)                                                                               

74. If you have a mortgage that has a large final payment, you have a(n)                                                                                                                                                                                                                    

75. If you have an interest rate subsidy from a home builder or real estate developer, you have a(n)    

76. 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)                                                                                                 

77. If you do not pay back any of the loan amount for a portion of the loan period, you have a(n)            

78. 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?

79. Andrew wants a loan that will allow him to pay back his 30-year mortgage in 15 to 18 years. His best choice is                                                                                 

80. The primary benefit of a home equity loan is

81. A reverse mortgage

82. During a home purchase closing, you should

83. Which of the following is the document that transfers ownership of property from one party to another?

84. Which of the following is an account used to pay property taxes and home insurance?

85. 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

86. Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except

87. Which of the following is NOT correct?

88. Franklin wants to sell his house himself. Which of the following is NOT correct about his sale?

89. If you are selling your house by owner, you should still enlist the assistance of

90. Which of the following is NOT correct regarding real estate agents?

91. 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

92.  Crystal is looking for a new apartment. What are her total annual costs associated with renting?

• Monthly rent payments $1,200
• Annual renter's insurance $250
• Annual interest lost on security deposit $10
• Value of apartment $150,000

93. Given the information below, what is the annual cost of owning?

• Home value - $450,000
• Annual mortgage payments - $16,500
• Annual property taxes - $7,200
• Annual homeowner's insurance - $960
• Estimated maintenance and repairs - 1 percent of home value
• Growth in equity - $4,500
• Tax savings (mortgage interest and property tax) - $4,800
• Estimate annual appreciation - 1.5 percent of home value

94.  Brett bought a house 5 years ago for $100,000. At that time, he borrowed $95,000 from his bank. The house is now worth $110,000. If he wants to stop paying his private mortgage insurance, he can request termination of PMI. The current value of his mortgage must be no higher than

95. Carrie bought a house 5 years ago for $200,000. At that time, she borrowed

$195,000 from her bank. The house is now worth $225,000. Her PMI will automatically be dropped when her mortgage balance drops to

96. Jordan earns an annual salary of $72,000. If a lender uses 33 percent of monthly gross income as a guideline for the maximum PITI (principal, interest, taxes, and insurance), what is the maximum mortgage that Jordan can apply for?