Home Mortgage Quiz

What is the primary purpose of Private Mortgage Insurance (PMI)?

• To increase the homeowner's equity in the property

• To protect lenders against loss if the borrower defaults on the loan

• To reduce the interest rate of the mortgage

• To cover property damages

Which of the following is NOT a recommended step in achieving the Great American Dream of owning a home?

• Having a three to six month emergency fund

• Making a down payment of less than 10%

• Staying in your home for more than three years

• Saving 25% of your take-home pay for your mortgage payment

What is a key difference between a 15-year mortgage and a 30-year mortgage?

• A 15-year mortgage typically has a higher monthly payment but builds equity faster

• A 30-year mortgage is only available for commercial properties

• A 15-year mortgage has a lower interest rate and builds equity slower

• A 30-year mortgage does not require any down payment

What is a leasing contract?

• A contract that binds the lessee to purchase the property after the lease term

• A legal contract that allows the renter, or lessee, rights to the use of a property owned or managed by the lessor for a period of time

• An agreement that transfers property ownership after a set period

• A financial agreement solely for purchasing vehicles

What does the term 'equity' refer to in a home mortgage context?

• The total amount of money borrowed to purchase the home

• The initial down payment made by the homebuyer

• The difference between the amount owed on the mortgage and the home's market value

• The fixed interest rate applied to the initial loan

What percentage of your take-home pay should your rent payment not exceed according to the image?

• 15%

• 25%

• 30%

• 50%

Private Mortgage Insurance (PMI) is added to a mortgage when less than 20% is given as a down payment?

• True

• False

All of the following could be listed in a lease agreement except:

• Rules about pets and fees

• Rent amount and due dates

• Rental term and dates

• The purchase price of the property

What happens if a tenant does not abide by the lease agreement according to the notes?

• The tenant receives a reward

• The tenant can buy the property at a lower price

• Not abiding by the lease will result in penalties to the tenant

• The lease automatically renews

All of the following are the first steps to buying a home except:

• Be debt fee

• Have 3-6 month emergency fund

• Save 20% to avoid PMI

• Plan to stay in your home less than three years