Chapter 8 Test

As interest rates increase, more people are able to afford the cost of an average-priced home.

• True

• False

Mortgage points are paid to the lender at the end of the mortgage.

• True

• False

The most common conventional mortgage is the 20-year ARM.

• True

• False

Most new mortgages are assumable.

• True

• False

Merrill bought a house and applied for a loan through the VA (Veterans Administration). The VA will provide the mortgage money.

• True

• False

Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5 percent mortgage (where the mortgage factor is 5.37), how much of a mortgage loan can he afford?

• $200,100.75

• $324,000.00

• $150,000.00

• $167,597.77

• $510,015.00

Which of the following is NOT correct?

• Renting offers more mobility versus buying.

• Traditional financial guidelines suggest that your home should cost about five times your annual income.

• Home ownership usually has long-term financial advantages.

• Lifestyle and financial factors should be analyzed to determine if you should rent or buy.

• Renting is usually less costly in the short run.

Which of the following is a disadvantage of renting?

• Renters have fewer responsibilities than home owners.

• Renters usually do not have to be concerned with maintenance and repairs.

• Renting can be more convenient for those who move frequently.

• Tenants cannot take tax deductions for mortgage interest and property taxes.

• Taking possession of a rental unit is less expensive than buying a home.

Which of the following is an advantage of renting?

• Tenants cannot take tax deductions for mortgage interest and property taxes.

• Renters have fewer responsibilities for maintenance than home owners.

• Noise from parties may be monitored closely and restricted.

• Tenants may have restrictions regarding pets.

• Tenants may be subject to restrictions regarding remodeling.

Most tenants sign a lease. Which of the following is part of a lease agreement?

• The interest rate for a lease loan.

• The name and address of the buyer.

• The amount of the down payment.

• The sale date.

• The conditions under which the landlord may enter the apartment.