AnswersPersonal Finance - EL3403Mortgages and Home Ownership

Mortgages and Home Ownership Answers

31 verified answers1 views
1
Free Preview

A balloon payment mortgage makes the best sense for borrowers who are

A
fearful of taking risks when borrowing money.
B
planning on selling their homes before the term of the loan ends.
C
looking to avoid borrowing money from banks.
D
anticipating losing their jobs in the next few years.
2
Free Preview

The chart shows the costs associated with the purchase of a new home.

Question illustration
A
cost of making repairs to the new home.
B
fees that must be paid to local schools.
C
costs associated with obtaining the loan.
D
fees assessed by the state or local government.
3

If someone buys a home for $200,000 and makes a 20 percent down payment, that person will have to

A
pay $20,000 up front.
B
pay $40,000 up front.
C
take out a mortgage for $200,000.
D
take out a mortgage for $220,000.
4

A borrower with bad credit is likely to be charged

A
a low interest rate.
B
a high interest rate.
C
no interest rate.
D
higher property taxes.
5

The graph shows changes in interest rates since 1975.

Question illustration
A
Interest rates can go up and down.
B
Interest rates can only go down.
C
Interest rates can only go up.
D
Interest rates show little change over time.
6

Many people prefer a fixed-rate mortgage because it

A
is variable.
B
might go down.
C
is predictable.
D
costs the least.
7

What is the best reason for homebuyers to create a budget before taking out a mortgage?

A
to compare the value of their home with that of their neighbors
B
to plan how to pay off the money they have borrowed
C
to set aside enough money to refinance the loan
D
to figure out how long they can stay in their home
8

The chart shows the costs associated with the purchase of a new home.

Question illustration
A
It is too expensive for most people to buy a new home.
B
There are additional fees and costs involved in taking out a mortgage.
C
Making a down payment means taxes do not have to be paid.
D
Fees and taxes make up about 50 percent of the costs of buying a home.
9

The table shows the terms of a fixed-rate mortgage.

Question illustration
A
M = P StartFraction Left-bracket R (1 minus R) Superscript n Baseline Right-bracket Over (1 + R) Superscript n Baseline EndFraction
Option A
B
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over Left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option B
C
M = P StartFraction R Over left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option C
D
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over (N + R) EndFraction
Option D
10

People most likely need to take out a mortgage when they

A
have bad credit.
B
are making a large purchase.
C
are spending less than $1,000.
D
have legal problems.
11

The image and chart show the terms of a sample balloon payment mortgage.According to the terms of the sample balloon payment mortgage, what will most likely occur at the end of the regular payment term?

Question illustration
A
the remaining principal of $173,073 will be due immediately
B
the interest rate will change to decrease the monthly payment
C
the loan’s terms have all been met and it is paid in full
D
the monthly payments will increase due to an increase in principal
12

When people take out a mortgage, they must pay back the money

A
when they are able.
B
within a year.
C
over time, usually many years.
D
as soon as they can.
13

An adjustable-rate mortgage is one that

A
can change.
B
stays the same.
C
only goes up.
D
only goes down.
14

Many people prefer a fixed-rate mortgage because it

A
is variable.
B
might go down.
C
is predictable.
D
costs the least.
15

The graph shows the average price of homes in the United States from 2009 to 2014.

Question illustration
A
The cost of a new home in the United States will continue to be inexpensive.
B
Rising home prices in recent years means that more people will need to take out mortgages.
C
More people will be able to pay cash for new homes and not need to take out a mortgage.
D
Based on recent trends, fewer people will need mortgages in the future.
16

What is the best reason for homebuyers to create a budget before taking out a mortgage?

A
to compare the value of their home with that of their neighbors
B
to plan how to pay off the money they have borrowed
C
to set aside enough money to refinance the loan
D
to figure out how long they can stay in their home
17

Homeowners typically pay property taxes to

A
reduce the amount of their mortgages.
B
avoid having to make a down payment.
C
help finance state and local governments.
D
help finance the campaigns of politicians.
18

An adjustable-rate mortgage is one that

A
can change.
B
stays the same.
C
only goes up.
D
only goes down.
19

The chart shows the costs associated with the purchase of a new home.

Question illustration
A
cost of making repairs to the new home.
B
fees that must be paid to local schools.
C
costs associated with obtaining the loan.
D
fees assessed by the state or local government.
20

The table shows the terms of a fixed-rate mortgage.

Question illustration
A
M = P StartFraction Left-bracket R (1 minus R) Superscript n Baseline Right-bracket Over (1 + R) Superscript n Baseline EndFraction
Option A
B
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over Left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option B
C
M = P StartFraction R Over left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option C
D
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over (N + R) EndFraction
Option D

Did you find these answers helpful?

More from this Course

Quiz
20 verified answers

Economic Systems

Quiz
14 verified answers

Introduction to Economics

Quiz
10 verified answers

Unit Test