Fin Chapter 7 Quiz 2

The legal document that defines the conditions of the rental agreement between the tenant and the landlord is called a:

• Mortgage

• Security Deposit

• Deed

• Lease

Answer explanation

The legal document that outlines the terms of the rental agreement between a tenant and a landlord is called a lease. It specifies the rights and responsibilities of both parties, unlike a mortgage or deed.

A _______ is a person who evaluates a house and land for a buyer.

• Home Inspector

• Real Estate Agent

• Tenant

• Landlord

Answer explanation

A Home Inspector is specifically trained to evaluate the condition of a house and land for potential buyers, making it the correct choice. Real Estate Agents facilitate sales, while Tenants and Landlords are involved in rental agreements.

A lender may ask a buyer to deposit money in a(n) _______ for paying property taxes.

• Home equity loan

• Escrow account

• Adjustable rate mortgage

• Deed

Answer explanation

A lender may require an escrow account to hold funds for property taxes, ensuring they are paid on time. This is a common practice to manage tax payments effectively.

One of the things a buyer can do to lower the interest rate on a loan is _______.

• Take out a second mortgage

• Obtain a home equity loan

• Have the house appraised

• Pay points

Answer explanation

Paying points allows a borrower to prepay interest on the loan, effectively lowering the interest rate. This is a common strategy to reduce monthly payments over the life of the loan.

A _______ is someone who is familiar with the local housing market.

• Landlord

• Real estate agent

• Tenant

• Property manager

• Homeowner

Answer explanation

A real estate agent is knowledgeable about the local housing market, helping clients buy, sell, or rent properties. Other options like landlord, tenant, property manager, and homeowner may not have the same level of market expertise.

__________ is the reduction of loan balance through payments made over a period of time.

• Amortization

• Social Security

• Private Mortgage Insurance (PMI)

• Stock Market

Answer explanation

Amortization is the process of gradually reducing a loan balance through scheduled payments over time, making it the correct choice for the definition provided.

What is the term for the initial payment made when buying a house?

• Equity

• Down payment

• Closing cost

• Interest rate

Answer explanation

The initial payment made when buying a house is called a down payment. It is a percentage of the home's purchase price and is required to secure a mortgage.

Which document is used to transfer ownership of property from one person to another?

• Lease

• Mortgage

• Deed

• Title

Answer explanation

A deed is the legal document used to transfer ownership of property from one person to another. Unlike a lease or mortgage, which pertain to rights of use or financing, a deed signifies the actual transfer of ownership.

What is the term for the fee paid to a lender for borrowing money?

• Amortization

• Equity

• Interest

• Principal

Answer explanation

The fee paid to a lender for borrowing money is called interest. It is the cost of using someone else's money, typically expressed as a percentage of the principal amount borrowed.

What is the term for the process of determining the value of a property?

• Appraisal

• Inspection

• Evaluation

• Assessment

Answer explanation

The term 'Appraisal' refers to the process of determining the value of a property, typically conducted by a professional appraiser. Other options like inspection and assessment do not specifically denote value determination.