Chapter 11 Lesson 4 Quiz

What is the primary financial criterion to consider before buying a house?

• Having a stable job
• Being debt-free
• Having a high credit score
• Owning a car

Why is it recommended to have an emergency fund of three to six months of expenses before buying a home?

• To afford luxury items
• To cover mortgage payments in case of job loss
• To invest in stocks
• To pay for home renovations

What is the advantage of making a larger down payment when purchasing a home?

• Lower monthly payments
• Higher interest rates
• Increased PMI costs
• Longer loan terms

Which type of mortgage is recommended for long-term financial stability?

• 30-year adjustable-rate mortgage
• 15-year fixed-rate conventional mortgage
• FHA loan
• VA loan

What is Private Mortgage Insurance (PMI)?

• Insurance that protects the homeowner
• Insurance that protects lenders if the borrower defaults
• Insurance that covers home repairs
• Insurance that lowers mortgage rates

What percentage of your take-home pay is suggested to be allocated for your mortgage payment?

• 15%
• 20%
• 25%
• 30%

What is the significance of equity in homeownership?

• It determines the monthly payment
• It is the difference between what you owe and the home's value
• It is the amount of the down payment
• It is the total cost of the mortgage

Which of the following is NOT a type of mortgage mentioned in the text?

• Conventional loans
• FHA loans
• VA loans
• Rural Development loans

What is a key step in the home-buying process?

• Getting preapproved for a loan
• Buying furniture
• Renovating the home
• Moving in immediately

What does a 15-year fixed-rate mortgage imply?

• The interest rate can change every year
• The loan is paid off in 15 years with a fixed interest rate
• The payments are lower than a 30-year mortgage
• It is only available to first-time buyers