Question 1

Real estate professionals believe that location is the most important factor to consider when selecting a home.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

An escrow account is money,usually depos...

Question 3

The purpose of title insurance is to:

Accepted Answer

A)  transfer ownership of property.
B)  reduce the chance of a decrease in property value.
C)  protect an owner from unforeseen property claims.
D)  protect an owner from changes in mortgage interest rates.
E)  cover the closing costs of a real estate transaction.F) A) and D)
G) A) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Refinancing of a mortgage is recommended when:

Accepted Answer

A)  interest rates rise.
B)  interest rates fall.
C)  the escrow account balance declines.
D)  two or more points are required by the lender at the time of closing.
E)  the escrow account balance increases.F) None of the above
G) B) and C)

Question 6

Which of the following is an advantage of renting an apartment?

Accepted Answer

A)  No tax benefits
B)  Easy to move
C)  Limitations regarding remodeling
D)  Restrictions regarding pets
E)  Higher utility expensesF) D) and E)
G) A) and E)

Question 7

The assessed value of your home is the:

Accepted Answer

A)  value used to calculate property taxes.
B)  estimated current market value.
C)  price you paid to purchase the home.
D)  amount of money a buyer has offered to purchase the home.
E)  cost basis assigned to your home by your insurance company.F) A) and D)
G) None of the above

Question 8

The main housing costs associated with renting are:

Accepted Answer

A)  property taxes.
B)  rent and utilities.
C)  property insurance.
D)  maintenance upkeep.
E)  down payment.F) All of the above
G) A) and C)

Question 9

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) None of the above
G) A) and D)

Question 10

A payment cap on an adjustable-rate mortgage can result in negative amortization when:

Accepted Answer

A)  interest rates decrease but the amount of the monthly payment does not.
B)  the amount of the monthly payment increases and interest rates do not.
C)  the amount of the monthly payment decreases and interest rates do not.
D)  interest rates rise but the amount of the monthly payment does not.
E)  the loan stretches out to 40 years.F) D) and E)
G) A) and E)

Question 11

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 issued.

Accepted Answer

A)  5
B)  9
C)  12
D)  18
E)  22F) C) and D)
G) A) and C)

Question 12

A contract condition that states that the agreement is binding only if a certain event occurs is a:

Accepted Answer

A)  dual agency.
B)  contingency clause.
C)  counteroffer.
D)  zoning law.
E)  prefabrication.F) A) and C)
G) B) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A lease is a legal document that provides the right to take legal action by the ________ for nonpayment of rent.

Accepted Answer

A)  landlord
B)  builder
C)  realtor
D)  tenant
E)  homeownerF) None of the above
G) B) and E)

Question 15

A multiunit dwelling with two,four,or six single-family living units is called:

Accepted Answer

A)  a cooperative.
B)  a mobile home.
C)  a manufactured home.
D)  a townhouse.
E)  a condominium.F) B) and E)
G) A) and B)

Question 16

During which phase of the home-buying process would you assess types of housing available?

Accepted Answer

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

Question 17

Which of the following would increase the equity in a home at a faster rate?

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 15-year mortgage instead of a 30-year mortgage
D)  Making larger deposits to the escrow account
E)  Obtaining an interest-only mortgageF) A) and B)
G) A) and C)

Question 18

Differentiate between a cooperative and a condominium.Be sure to include a discussion of the ownership and responsibility for the common areas.

Accepted Answer

Answers will vary.In cooperative housing...

Question 19

Which of the following is an example of a conventional mortgage?

Accepted Answer

A)  An FHA mortgage
B)  A buy-down
C)  A fixed-rate mortgage
D)  A shared-appreciation mortgage
E)  A home equity loanF) D) and E)
G) A) and E)

Question 20

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

Exam 9: The Housing Decision: Factors and Finances

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

Refinancing of a mortgage is recommended when:

Correct AnswerverifiedShow Answer

Which of the following would increase the equity in a home at a faster rate?

Correct AnswerverifiedShow Answer

The purpose of title insurance is to:

Correct AnswerverifiedShow Answer

A lease is a legal document that provides the right to take legal action by the ________ for nonpayment of rent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAn escrow account is money,usually depos...View AnswerShow Answer

The assessed value of your home is the:

Correct AnswerverifiedShow Answer

A payment cap on an adjustable-rate mortgage can result in negative amortization when:

Correct AnswerverifiedShow Answer

During which phase of the home-buying process would you assess types of housing available?

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 lease provides protection to both the tenant and the landlord.

Correct AnswerverifiedShow Answer

Real estate professionals believe that location is the most important factor to consider when selecting a home.

Correct AnswerverifiedShow Answer

Which of the following is an example of a conventional mortgage?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of renting an apartment?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main housing costs associated with renting are:

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 issued.

Correct AnswerverifiedShow Answer

A contract condition that states that the agreement is binding only if a certain event occurs is a:

Correct AnswerverifiedShow Answer

Differentiate between a cooperative and a condominium.Be sure to include a discussion of the ownership and responsibility for the common areas.

Correct AnswerverifiedAnswers will vary.In cooperative housing...View AnswerShow Answer

A multiunit dwelling with two,four,or six single-family living units is called:

Correct AnswerverifiedShow Answer

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An escrow account is money,usually depos...
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Answers will vary.In cooperative housing...
View Answer

Correct Answer
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