Buying a home

When planning to buy a home, your monthly housing related costs should not exceed what percentage of your monthly gross income?

• 24%
• 28%
• 36%
• 50%

A simple formula for finding your equity in your home is:

• Purchase price of your home-outstanding loan balance
• Down payment plus sum of mortgage payments to date
• market value of your home minus outstanding loan balance 
• none of the above 

All of the following could be considered closing costs except:

• A title search
• Cost of repainting kitchen before moving in
• Fee of obtaining credit report 
• Title insurance 

You will always pay less interest (total cost) w/ a 15-year mortgage than with a 30 yr mortgage, provided that the interest rate is the same for both loans.

• TRUE
• FALSE 

The location of a home is important because:

• A good location will make a home easier to sell later
• Homes in good locations will usually appreciate in value
• Not all locations have good school systems or the same amenities
• All of the above

A real estate agent is able to:

• Get you a lower price on a home
• Arrange for you to tour homes that you are interested in purchasing 
• Assist you at closing 
• Both b and c 

Your total debt from all loans should not exceed what percentage of your gross monthly salary?

• 16%
• 26%
• 36%
• 40%

A "point" on a loan equals:

• .1% of the loan 
• 1% of the loan 
• 2% of the loan 
• 10% of the loan 

When figuring out the total amount of debt you are responsible for, you should include:

• Car loans and home loans 
• Car loans, home loans, school loans, and any credit card debt 
• any debt that must be repaid within 3 years 

Which statement is true of an adjustable rate mortgage:

• Payments will adjust each year based on the amount of equity you have in your home 
• The interest rate will stay fixed for a period of time, then adjust based on index
• The interest rate can only change twice during the course of the loan 
• An adjustable rate mortgage always includes a balloon payment at the end of teh 7th year