Ch 11 Lesson 4 Quiz

What is the recommended down payment percentage when buying a house?

• 0-5%
• 5-10%
• 10-20%
• 20-30%

Why is it important to be debt-free before buying a home?

• It increases your credit score
• It reduces stress during the home buying process
• It allows for a larger mortgage
• It eliminates the need for a down payment

What type of mortgage is recommended for long-term homeownership?

• 30-year fixed-rate mortgage
• 15-year fixed-rate mortgage
• Adjustable Rate Mortgage
• Interest-only mortgage

What does Private Mortgage Insurance (PMI) protect against?

• Homeowner's insurance
• Loss if the borrower defaults
• Natural disasters
• Market fluctuations

What is the primary benefit of a 15-year fixed-rate mortgage compared to a 30-year mortgage?

• Lower monthly payments
• Higher total cost of the loan
• Faster equity building
• More flexible payment options

What is the significance of having an emergency fund before buying a home?

• To cover the down payment
• To pay for home inspections
• To manage mortgage payments during job loss
• To negotiate better mortgage rates

Which type of mortgage is backed by the Federal Housing Administration?

• Conventional loans
• FHA loans
• VA loans
• Adjustable Rate Mortgages

What is a common mistake first-time homebuyers make regarding mortgage costs?

• Focusing on the total cost of the loan
• Ignoring the monthly payment
• Choosing a fixed-rate mortgage
• Considering the interest rate only

What is the recommended percentage of take-home pay that should go towards a mortgage payment?

• 15%
• 20%
• 25%
• 30%

What should you do if you are not planning to stay in a location for more than three years?

• Buy a house anyway
• Rent instead of buying
• Invest in a vacation home
• Look for a short-term mortgage