Home Ownership Quiz

The bank has approved a person’s loan with a loan to value (LTV) of 96.5 percent. The home he wants is valued at $210,000. He negotiates a purchase price of $195,000. What amount is his required down payment?

• $5,250

• $6,050

• $6,825

• $7,350

• $7,825

Loan to value (LTV) represents the ratio of home loan compared to home value the bank is willing to lend.

• True

• False

Brady has been approved for a home loan on a property he has under contract. The purchase price is $150,000, and he is required to have $5,250 as a down payment. Which of the following loan types is Brady most likely getting?

• Conventional loan

• ARM loan

• FHA loan

• VA loan

• Fixed loan

When is a home considered under contract?

• When the buyer qualifies for a loan

• When the seller and buyer have signed the offer

• When the buyer signs the seller’s offer

• When the 10-day option period is over

What factors are considered during the preapproval process of a mortgage?

• Length of employment

• Credit score

• Debt

• Income

• A person cannot get preapproved for a mortgage.

Although permanent depreciation is rare, which of the following scenarios would not likely result in permanent depreciation?

• Major employers go out of business, causing people to move out of the area.

• Gangs migrate into nearby areas, increasing local crime rates.

• Interest rates drop, making home loans less expensive.

• An airport is built nearby, increasing traffic, noise, and regulatory measures.

Which of the following utility bills should a person plan on paying for when buying a house that she most likely did not have to pay for when renting an apartment?

• Electricity

• Natural gas

• Water/sewer/garbage

• Cable/internet

Which of the following is a major difference between fixed and ARM loans?

• Fixed interest rates start higher but never change.

• ARM interest rates start higher but get smaller over the lifespan of the loan.

• Fixed interest rates start lower but require higher credit scores to obtain.

• Both have changing interest rates, but the rates change the same amount every year.

• ARM interest rates start lower but are short-term loans.

A home’s value can be impacted by the value of houses that are currently for sale in the area

• True

• False

A house payment can be up to ________ percent of a person’s monthly gross income to qualify for a loan.

• 10

• 20

• 25

• 30