Quiz 7: Buying a House

What is an advantage of buying a house, compared to renting?

• Lower overall housing costs

• Freedom to decorate or renovate

• More flexibility to move

• Less financial risk

Amelia has a high credit score. How will that help her buy a home?

• She can apply to decrease her debt-to-income ratio

• She can qualify for a mortgage with a lower interest rate

• She can sell her current house for a higher price

• She can get a higher down payment on her mortgage

What is the largest expense that someone generally pays at the time they buy a house?

• Property taxes

• Down payment

• Closing costs

• Utilities

Sarah realized that she can’t afford to buy a house right now, but wants to get ready to buy in a few years. All of the following strategies could increase her future housing budget, EXCEPT...

• Reduce her monthly debt payments

• Increase her income

• Find a house with higher HOAs

• Save for a higher down payment

A real estate agent can assist a buyer with all of the following, EXCEPT...

• Finding houses that meet a buyer’s needs and financial situation

• Setting up appointments to view homes that a buyer is interested in

• Removing negative information from a buyer’s credit report to get better interest rates

• Scheduling home inspections and appraisals after a buyer has made an offer on a property

What is the purpose of mortgage preapproval?

• Getting preapproved gives you access to money to be used for a down payment

• Getting preapproved shows a seller that you’re a serious homebuyer that can secure a mortgage

• Getting preapproved helps increase your credit score so that when you apply for a mortgage you can get the best rates

• Getting preapproved puts you first in line to buy a house if you choose to make an offer

What causes the total amount of interest paid on a mortgage to be so much higher than on other types of debts?

• The APR on a mortgage is typically between 20-30%, which is higher than for other types of debt

• The principal on a mortgage is high and the term is long

• Borrowers typically delay making mortgage payments because their home cannot be repossessed for nonpayment

• Homeownership is not very common in the US, so mortgages are priced high because demand is so low

Which of the following is a good reason to choose a 30-year, fixed-rate mortgage?

• You want to make high monthly payments and close your mortgage sooner

• You want to minimize the amount of interest you’ll pay over the life of the loan

• You want low, predictable monthly payments

• You want to take advantage of the ups and downs of the market and don’t mind risk

In most cases, all of the following will be present at the home closing EXCEPT...

• The buyer

• The closing agent

• The home inspector

• The seller’s agent

Which of the following is not a responsibility of an escrow company during the home buying process?

• Conducting the home inspection

• Holding money for down payments and closing costs

• Ensuring all necessary documents are in order

• Tracking deadlines and instruction