Understanding Home Buying Legalities

What is a property title?

• A legal document that shows ownership of a property

• A document that lists the zoning laws of a property

• A report on the condition of a property

• A financial agreement for a mortgage

Answer explanation

A property title is a legal document that proves ownership of a property, making it the correct choice. The other options refer to zoning laws, property condition reports, and mortgage agreements, which are not titles.

Which of the following is a common issue found in property titles?

• Zoning law violations

• Unpaid property taxes

• Home inspection failures

• High closing costs

Answer explanation

Unpaid property taxes are a common issue in property titles, as they can create liens against the property. Zoning law violations, home inspection failures, and high closing costs are not directly related to title issues.

What do zoning laws regulate?

• The interest rates on mortgages

• The types of structures that can be built in certain areas

• The cost of home inspections

• The disclosure obligations of sellers

Answer explanation

Zoning laws primarily regulate land use, determining the types of structures that can be built in specific areas. This ensures that developments align with community planning and safety standards.

What is the primary purpose of a home inspection?

• To determine the market value of a property

• To identify any potential issues or repairs needed in a home

• To ensure the property complies with zoning laws

• To finalize the mortgage agreement

Answer explanation

The primary purpose of a home inspection is to identify any potential issues or repairs needed in a home, ensuring buyers are aware of the property's condition before making a purchase.

What must sellers disclose to potential buyers?

• The interest rate of their mortgage

• Any known defects or issues with the property

• The zoning laws of the neighborhood

• The cost of the home inspection

Answer explanation

Sellers are required to disclose any known defects or issues with the property to potential buyers. This transparency helps buyers make informed decisions and protects sellers from future liability.

What is a mortgage?

• A type of insurance for homeowners

• A loan used to purchase a home

• A document that outlines zoning laws

• A report on home inspection findings

Answer explanation

A mortgage is specifically a loan used to purchase a home, allowing buyers to finance their property over time. The other options do not accurately describe what a mortgage is.

Which of the following is typically included in closing costs?

• The down payment on the house

• Fees for the home inspection

• Title insurance and attorney fees

• The monthly mortgage payment

Answer explanation

Closing costs typically include various fees associated with the purchase of a home, such as title insurance and attorney fees, which are necessary for the transaction. The down payment and monthly mortgage payment are separate.

What is the role of title insurance in a real estate transaction?

• To protect the buyer from future zoning law changes

• To cover the cost of home repairs

• To protect against losses from title defects

• To ensure the mortgage interest rate remains fixed

Answer explanation

Title insurance protects the buyer against losses from title defects, such as liens or ownership disputes, ensuring they have clear ownership of the property. This is crucial in real estate transactions.

What is typically required before a mortgage can be approved?

• A zoning law review

• A home inspection

• A disclosure statement

• A closing cost estimate

Answer explanation

A home inspection is typically required before a mortgage can be approved to ensure the property is in good condition and meets lender standards. This step helps protect both the buyer and the lender.

Which document outlines the terms and conditions of a mortgage?

• The property title

• The zoning permit

• The loan agreement

• The home inspection report

Answer explanation

The loan agreement is the document that outlines the terms and conditions of a mortgage, detailing the obligations of both the borrower and the lender. The other options do not serve this purpose.