Personal Finance: Automobile and Housing Decisions Quiz

When budgeting for a car, what percentage of your monthly income is generally recommended to cover all car-related expenses?

• 5-10%

• 15-20%

• 30-35%

• 40-45%

Which of the following is NOT a common type of mortgage option?

• Fixed-rate mortgage

• Adjustable-rate mortgage

• Interest-only mortgage

• Rent-to-own mortgage

What is a major advantage of leasing a car compared to buying?

• Ownership of the car at the end of the lease term

• Lower monthly payments

• No depreciation concerns

• Both B and C

Which of the following is NOT typically included in homeownership costs?

• Mortgage payments

• Property taxes

• Car insurance

• Homeowners insurance

What is a benefit of buying a home instead of renting?

• Flexibility to move at any time

• No responsibility for maintenance or repairs

• Potential for property value appreciation

• Lower initial costs

What is the primary financial benefit of renting a home?

• Building equity

• Lower maintenance costs

• Tax deductions on mortgage interest

• Potential for rental income

When considering a fixed-rate mortgage, what remains constant over the life of the loan?

• The total amount paid each month

• The interest rate

• The property taxes

• The insurance premium

What is a disadvantage of buying a car with a loan compared to leasing?

• Higher monthly payments

• Restrictions on mileage

• The car must be returned at the end of the lease term

• Less choice in vehicle models

What factor does NOT affect the cost of homeowners insurance?

• The home's location

• The homeowner's credit score

• The color of the house

• The home's replacement cost

Why might someone choose an adjustable-rate mortgage (ARM) over a fixed-rate mortgage?

• ARM offers a lower initial interest rate.

• ARM interest rates and payments decrease over time.

• ARM has no interest rate caps.

• ARM requires a larger down payment.