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Multiple Choice Quiz
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1
One of the advantages of owning your own home is:
A)The easy ability to move.
B)Few or no responsibilities for maintenance.
C)The growth in equity while you own the home.
D)Lower initial costs.
E)All of the above are advantages of owning your own home.
2
Which of the following is a disadvantage of home ownership?
A)Limited mobility
B)Limited lifestyle
C)Lower livings costs than when renting
D)No tax savings
E)All of the above are disadvantages.
3
Jeff Willis earns $2500 in gross income during the month. Jeff has $400 in debt payments during the month and has estimated that his tax and homeowner's insurance payments will be $125 per month. Jeff plans on putting 10% down and will be able to get a 30-year mortgage at 9%. What is the maximum priced home he can afford? (Refer to the mortgage payment factor table in the textbook.)
A)$245,342
B)$272,602
C)$52,795
D)$58,661
E)None of the above
4
Edward Jones is buying a new home. The amount of the loan that he needs is $150,000 and he is trying to decide between two mortgage choices. He can have a 30-year mortgage at 8% with no points or he can have a 30-year mortgage at 7.25% with 1.75 points. How many months would he have to live in the house to make it worth his while to pay the points and get the lower interest rate? He has determined that his monthly payments on the first mortgage would be $1100.65 and that his monthly payments on the second mortgage would be $1023.26.
A)33.92 months
B)77.39 months
C)2625 months
D)1938 months
E)None of the above
5
John Gleason has a 30-year mortgage with monthly payments of $790.09 at an interest rate of 6.5%. The amount of the loan is $125,000. How much of John's first payment is principal?
A)$790.09
B)$677.08
C)$8125.00
D)$113.01
E)None of the above
6
Which of the following is money deposited with the lending institution for the payment of property taxes and homeowner's insurance?
A)Title insurance
B)Closing costs
C)Warranty deed
D)Escrow account
E)None of the above
7
A home loan agreement in which the borrower agrees to share the increased value of the home with the lender is called:
A)A second mortgage.
B)A reverse mortgage.
C)A shared appreciation mortgage.
D)A growing equity mortgage.
E)None of the above.
8
Which of the following might not be a typical contingency clause in a home purchase agreement?
A)The agreement is contingent on the buyer selling their current home.
B)The agreement is contingent on the buyer obtaining financing.
C)The agreement is contingent on the buyer being able to move their pets into the home after the closing.
D)The agreement is contingent there being no liens or problems with the title.
E)All of the above are typical contingency clauses.
9
A(n) __________ is a long term loan on a specific piece of property.
A)Points
B)Earnest money
C)Escrow account
D)Mortgage
E)None of the above
10
A(n) __________ is a home loan with an interest rate that can change leading to a change in payments over the life of the loan.
A)Conventional mortgage
B)Balloon mortgage
C)Adjustable rate mortgage
D)Graduated payment mortgage
E)None of the above





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