The Housing Decision: Factors and | Verified Test Bank Ch.9

Personal Finance, 13e (Kapoor)

Chapter 9 The Housing Decision: Factors and Finances

1) A lease provides protection to both the tenant and the landlord.

Difficulty: 1 Easy

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

2) Condominiums involve the purchase of an individual housing unit in a building rather than an entire building.

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

3) Real estate professionals believe that location is the most important factor to consider when selecting a home.

Difficulty: 1 Easy

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

4) Negotiating a purchase price for a home can involve an offer and a counteroffer.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

5) The amount of cash available for a down payment will affect the size of the mortgage loan needed to purchase a home.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

6) Prepaid interest may be charged by the lender for a lower mortgage rate.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

7) Amortization refers to changes in the monthly payment for a variable rate mortgage.

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

8) An FHA fixed-rate mortgage has low down payment requirements and is fully assumable with no prepayment penalties.

Difficulty: 2 Medium

Topic: Home purchase financing alternatives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

9) An escrow account is designed to reduce the cost of a mortgage.

Difficulty: 2 Medium

Topic: Escrow accounts

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

10) An appraisal refers to the price for which a home has been sold.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

11) Home improvements may or may not increase the selling price of the home.

Difficulty: 1 Easy

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

12) The purpose of a rate cap in an adjustable-rate mortgage is to limit the amount by which the interest rate can increase or decrease during the ARM term.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

13) A deed is the document that transfers ownership of the property from one party to another.

Difficulty: 2 Medium

Topic: Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

14) Real estate advisors suggest a price-to-rent ratio of 25 or lower when you buy to possibly avoid a lower home value after your purchase.

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

15) A payment cap keeps the payments on an adjustable-rate mortgage at a given level or limits the amount to which those payments can rise.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

16) Renting is more advantageous than buying a home when you are seeking:

A) lower initial costs.

B) fewer restrictions regarding remodeling.

C) a long-term investment.

D) tax deductions for property taxes.

E) permanence of residence.

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

17) A common cost associated with renting is:

A) the down payment.

B) closing costs.

C) property taxes.

D) maintenance costs.

E) the security deposit.

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

18) A major expense associated with home ownership would be:

A) renter's insurance.

B) the security deposit.

C) increased value of the property.

D) real estate taxes.

E) interest lost on the security deposit.

Difficulty: 2 Medium

Topic: Home affordability and ratios

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

19) Renting would be most appropriate for people who:

A) want more tax deduction benefits.

B) desire to do their own maintenance and repairs.

C) have limited initial funds available.

D) enjoy remodeling their residence.

E) desire unmonitored parties.

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

20) Kate plans to rent instead of buying her housing. Which advantage of renting will she realize?

A) Tax deductions

B) Ease of mobility

C) Property value increases

D) Restricted lifestyle

E) Home remodeling flexibility

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

21) The legal document involved in renting an apartment is called a:

A) service contract.

B) mortgage.

C) lease.

D) security deposit.

E) escrow account.

Difficulty: 1 Easy

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

22) What does it mean to sublet an apartment?

A) Increase the rent

B) Lower maintenance costs

C) Convert the units to condominiums

D) Meet certain government housing regulations

E) Obtain another tenant to take over rent payments during the lease period

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

23) The purpose of a security deposit is to:

A) pay for any damages that may occur during the lease period.

B) cover the costs of utilities.

C) pay for the tenant's portion of real estate property taxes.

D) cover increases in monthly rent.

E) meet government housing regulations for a safe building.

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

24) A condominium involves:

A) renting a mobile home.

B) buying stock in a nonprofit organization.

C) ownership of an individual housing unit in a building.

D) government-subsidized housing.

E) renting a house with the option to buy.

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

25) A multiunit dwelling with two, four, or six single-family living units is called:

A) a cooperative.

B) a mobile home.

C) a manufactured home.

D) a townhouse.

E) a condominium.

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

26) A cooperative housing arrangement involves:

A) government-supported rental units.

B) a nonprofit organization whose residents must own its stock.

C) individual ownership of a living unit in a building.

D) factory built and on-site assembly.

E) housing units owned by a real estate developer.

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

27) Prefabricated homes refers to:

A) nonprofit ownership.

B) government leasing of living units.

C) rental units available to government employees.

D) ownership available to low-income individuals.

E) housing units that are partially assembled in factories.

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

28) Which of these is a potential financial benefit of home ownership?

A) Low security deposit

B) Tax deductibility of the down payment

C) Lifestyle flexibility

D) Increases in property value

E) No maintenance cost

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

29) Which of the following would increase the amount that a person could afford to spend on a home?

A) Increase in family income

B) Increase in insurance payments

C) Decrease in initial maintenance and repairs

D) Increase in utility bills

E) Increase in monthly living expenses

Difficulty: 3 Hard

Topic: Home affordability and ratios

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

30) As you determine how much of a home you can afford, consider the price of the house along with the quality and:

A) size of the home.

B) school zone.

C) location of the home.

D) local zoning laws.

E) outdoor living area.

Difficulty: 2 Medium

Topic: Home purchase selection process

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

31) The purpose of zoning laws is to:

A) restrict property use.

B) encourage new housing development.

C) minimize people moving from an area.

D) reduce real estate property taxes.

E) assist real estate agents in finding homes for sale.

Difficulty: 2 Medium

Topic: Home purchase selection process

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

32) Which type of repair problem is more likely to be covered by a new homeowner service contract?

A) Structural damage

B) Roof damage from a hurricane

C) Paint for worn exterior

D) Heating and air-conditioning system failure

E) Remodeling the kitchen

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

33) The purpose of a counteroffer is to:

A) negotiate the purchase price.

B) reduce mortgage payments.

C) lower real estate property taxes.

D) avoid paying points at closing.

E) avoid paying the real estate agent's commission.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

34) Earnest money is used:

A) to pay real estate property taxes.

B) to reduce the mortgage interest rate.

C) as evidence of good faith by a homebuyer.

D) to pay the real estate agent's commission.

E) to pay a mortgage application fee.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

35) The amount of mortgage a person is eligible for will be larger when:

A) the value of the collateral is lower.

B) the down payment is lower.

C) other debt obligations are higher.

D) the family's income is lower.

E) the interest rates are lower.

Difficulty: 2 Medium

Topic: Home affordability and ratios

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

36) Which of the following would increase the equity in a home at a faster rate?

A) Making a down payment of 10 percent instead of 20 percent

B) Obtaining a mortgage interest rate of 9 percent instead of 8 percent

C) Obtaining a 15-year mortgage instead of a 30-year mortgage

D) Making larger deposits to the escrow account

E) Obtaining an interest-only mortgage

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

37) Prepaid interest charged by a mortgage lender is called:

A) Escrow

B) Points

C) Origination fee

D) Title fee

E) Deed

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

38) Todd Foley is applying for a $100,000 mortgage. He can select either a $595 monthly payment with no points or a $515 payment with two points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?

A) 6

B) 10

C) 18

D) 25

E) 48

Explanation: $100,000 × 2% = $2,000; $2,000 / ($595 − $515) = 25

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

39) A conventional mortgage usually has:

A) a variable interest rate.

B) a government guarantee.

C) a balloon payment.

D) equal payments.

E) a payment cap.

Difficulty: 1 Easy

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

40) Which of the following is an example of a conventional mortgage?

A) An FHA mortgage

B) A buy-down

C) A fixed-rate mortgage

D) A shared-appreciation mortgage

E) A home equity loan

Difficulty: 2 Medium

Topic: Home purchase financing alternatives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

41) A VA-guaranteed loan program provides assistance to:

A) armed services veterans.

B) recent college graduates.

C) low-income homebuyers.

D) government employees.

E) the elderly.

Difficulty: 1 Easy

Topic: Home purchase financing alternatives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

42) A possible advantage of FHA and VA mortgages can be:

A) higher debt ratios are required of buyers.

B) loans may be assumable.

C) the high interest loans are attractive.

D) the monthly payments will always be higher than those of other mortgages.

E) higher down payments are required of buyers.

Difficulty: 2 Medium

Topic: Home purchase financing alternatives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

43) The purpose of a rate cap with an adjustable rate mortgage is to:

A) minimize interest costs.

B) prevent changes in the amount of the monthly payment.

C) increase negative amortization.

D) restrict the amount by which the interest rate can increase or decrease during the ARM term.

E) lower the escrow account.

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

44) Which one of these situations creates negative amortization?

A) When the amount of the monthly mortgage payment increases

B) When the monthly mortgage payment does not cover the interest owed

C) When the amount paid into an escrow account decreases

D) When the mortgage interest rate decreases

E) When the amount of the down payment is lowered

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

45) A newly married couple is having trouble affording a home. What type of mortgage arrangement would reduce the monthly payment as a result of an interest rate subsidy from a builder or real estate developer?

A) FHA-insured loan

B) Balloon mortgage

C) Buy-down

D) Shared-appreciation mortgage

E) Growing-equity mortgage

Difficulty: 2 Medium

Topic: Buyer incentives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

46) A home equity loan may also be referred to as a ________ mortgage.

A) shared-appreciation

B) graduated-payment

C) growing-equity

D) second

E) buy-down

Difficulty: 1 Easy

Topic: Home equity loans

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

47) Refinancing of a mortgage is recommended when:

A) interest rates rise.

B) interest rates fall.

C) the escrow account balance declines.

D) two or more points are required by the lender at the time of closing.

E) the escrow account balance increases.

Difficulty: 2 Medium

Topic: Mortgage refinancing

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

48) Which of the following is an example of a closing cost?

A) Home inspection fees

B) Moving expenses

C) Earnest money

D) Title insurance

E) Down payment

Difficulty: 2 Medium

Topic: Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

49) The purpose of title insurance is to:

A) transfer ownership of property.

B) reduce the chance of a decrease in property value.

C) protect an owner from unforeseen property claims.

D) protect an owner from changes in mortgage interest rates.

E) cover the closing costs of a real estate transaction.

Difficulty: 2 Medium

Topic: Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

50) Which document does the seller use to guarantee the title is good?

A) Title

B) Escrow account

C) Settlement statement

D) Appraisal

E) Warranty deed

Difficulty: 1 Easy

Topic: Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

51) Which of the following expenses is paid from an escrow account?

A) Title insurance

B) Property taxes

C) Points

D) Loan application fee

E) Real estate agent's commission

Difficulty: 2 Medium

Topic: Escrow accounts

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

52) An appraisal is likely to cost between:

A) $100 - $200.

B) $200 - $300.

C) $300 - $400.

D) $400 - $500.

E) $500 - $600.

Difficulty: 2 Medium

Topic: Home sales preparations and procedures; Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.; 09-05 Develop a strategy for selling a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

53) If you sell your home without a real estate agent, you should still employ the services of a(n) ________ to assist you with the contract and the closing.

A) broker

B) insurance agent

C) lawyer

D) contractor

E) rental agent

Difficulty: 2 Medium

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

54) One service provided by a real estate agent when selling your home is:

A) providing legal advice.

B) completing a mortgage application.

C) screening potential buyers.

D) making needed repairs.

E) conducting a home inspection.

Difficulty: 3 Hard

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

55) Which one of the following is an advantage of renting?

A) Tax benefits

B) Fewer responsibilities

C) Increased value of real estate

D) Increased maintenance costs

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

56) Which one of the following is an advantage of buying?

A) Ease of mobility

B) Financial benefits

C) Fewer responsibilities

D) Minimal financial commitment

E) Declining equity

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

57) A cost associated with renting would be:

A) property insurance.

B) property taxes.

C) down payment and closing costs.

D) security deposit.

E) mortgage interest.

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

58) A ________ is a building that contains exactly two housing units.

A) mobile home

B) duplex

C) condominium

D) prefabricated home

E) cooperative

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

59) Gary Smith is purchasing one housing unit in a building with several units. What type of housing is Gary most likely going to live in?

A) Condominium

B) Duplex

C) Cooperative

D) Prefabricated home

E) Mobile home

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

60) James Monroe is a member of a nonprofit organization that owns a building. He can occupy one of its units as long as he owns stock in the organization. What type of housing is James most likely living in?

A) A condominium

B) A duplex

C) A cooperative

D) A prefabricated home

E) A mobile home

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

61) Jennifer Garland is purchasing a home with components built in a factory and then assembled at the housing site. What type of housing is Jennifer purchasing?

A) Condominium

B) Duplex

C) Cooperative

D) Prefabricated home

E) Penthouse

Difficulty: 2 Medium

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

62) What is the most popular form of housing?

A) Condominium

B) Duplex

C) Cooperative

D) Prefabricated home

E) Single-family dwelling

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

63) The assessed value of your home is the:

A) value used to calculate property taxes.

B) estimated current market value.

C) price you paid to purchase the home.

D) amount of money a buyer has offered to purchase the home.

E) cost basis assigned to your home by your insurance company.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

64) The appraised value of your home is the:

A) value used to calculate property taxes.

B) estimated current value of the property.

C) price you paid to purchase the home.

D) amount of money a buyer has offered to purchase the home.

E) cost remaining after the down payment.

Difficulty: 2 Medium

Topic: Home sales preparations and procedures; Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.; 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

65) Michelle Duncan wants to know what price home she can afford. Her annual gross income is $45,000. She owes $550 per month on other debts and expects her property taxes and homeowners insurance to cost $225 per month. She knows she can get an 8%, 30-year mortgage so her mortgage payment factor is 7.34. She expects to make a 20% down payment. What is Michelle's affordable home purchase price? Round your answer to the nearest $100.

A) $110,700

B) $88,600

C) $199,300

D) $42,500

E) $254,800

Explanation: $45,000 / 12 = $3,750; $3,750 × 0.38 = $1,425; $1,425 − $550 − $225 = $650; $650 / 7.34 × 1,000 = $88,555.86; $88,555.86 / (1 − 0.20) = $110,694.83 = $110,700 rounded.

Difficulty: 3 Hard

Topic: Home affordability and ratios

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

66) Duane Miller wants to know what price home he can afford. His annual gross income is $60,000. He has no other debt expenses and expects property taxes and insurance to cost $500 per month. He knows he can get a 6%, 15 year mortgage so his mortgage payment factor is 8.43. He expects to make a 10% down payment. What is Duane's affordable home purchase price? Round your answer to the nearest $100.

A) $148,300

B) $177,900

C) $151,600

D) $197,700

E) $1,483,000

Explanation: $60,000 / 12 = $5,000; $5,000 × 0.33 = $1,650; $1,650 − $500 = $1,150; $1,150 / 8.43 × 1,000 = $136,417.56; $136,417.56 / (1 − 0.10) = $151,575.07 = $151,600.

Difficulty: 3 Hard

Topic: Home affordability and ratios

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

67) A loan based on the high equity in a home that provides the homeowner with tax-free income and which is paid back when the home is sold or the homeowner dies is called a:

A) conventional mortgage.

B) growing equity mortgage.

C) second mortgage.

D) reverse mortgage.

E) adjustable rate mortgage.

Difficulty: 2 Medium

Topic: Reverse mortgages

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

68) A renter is required to pay a security deposit of $800, on which 3 percent interest will be paid. What amount would the person earn each year?

A) $100

B) $64

C) $24

D) $16

E) $4

Explanation: $800 × 0.03 = $24

Difficulty: 1 Easy

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

69) If closing costs of $1,950 are associated with the refinance of a mortgage that would reduce the monthly payment from $890 to $780, it would take approximately ________ months to cover these costs.

A) 8

B) 16

C) 18

D) 20

E) 22

Explanation: $1,950 / ($890 − $780) = 17.73 = 18 rounded.

Difficulty: 2 Medium

Topic: Mortgage refinancing

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

70) A contract condition that states that the agreement is binding only if a certain event occurs is a:

A) dual agency.

B) contingency clause.

C) counteroffer.

D) zoning law.

E) prefabrication.

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

71) Paula has completed a mortgage application and provided evidence of employment, income, assets owned, and existing debt to the potential lending institution. Although Paula has not even begun the process of looking at possible homes to buy, she is eagerly awaiting news from the lender as to whether she has been approved for a mortgage. In what stage of the application process is she?

A) Appraisal

B) Prequalification

C) Assessment

D) Amortization

E) Home inspection

Difficulty: 2 Medium

Topic: Mortgage applications

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

72) Nicole and Larry have decided to perform the landscaping of their new home by themselves. They also plan to take a do-it-yourself class at a local home store so they can replace the tile in the master bathroom without using a contractor. The effect of performing these tasks themselves will result in an increase in their:

A) principal.

B) contingencies.

C) escrow account.

D) sweat equity.

E) buy-down.

Difficulty: 2 Medium

Topic: Home sales preparations and procedures

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

73) Which type of home has a tendency to quickly depreciate in value?

A) Cooperative

B) Mobile home

C) Condominium

D) Duplex

E) Previously-owned single family home

Difficulty: 2 Medium

Topic: Evaluating housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

74) Brett has hired a professional to assess the soundness of the roof, foundation, and building materials of a potential home he is considering. The professional will also be checking other aspects of the home including the plumbing, heating, and cooling systems. Brett is paying for a:

A) walk-through.

B) zoning evaluation.

C) home inspection.

D) title search.

E) handyman's special.

Difficulty: 2 Medium

Topic: Home inspections

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

75) Legislation that requires that loan applicants be given certain information, including an estimate of the costs, three days before the closing, is known as:

A) the Real Estate Settlement Procedures Act.

B) the Cooperative Lending Act.

C) the Truth in Lending Act.

D) the Title Insurance Act.

E) the Real Estate Investment Act.

Difficulty: 2 Medium

Topic: Closing costs and procedures

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

76) During which phase of the home-buying process would you assess types of housing available?

A) Price the property

B) Find and evaluate a property to purchase

C) Obtain financing

D) Determine home ownership needs

E) Close the purchase transaction

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

77) The Homeowners Protection Act requires that a PMI policy be terminated automatically when a homeowner's equity reaches ________ percent of the property value at the time the mortgage was issued.

A) 5

B) 9

C) 12

D) 18

E) 22

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

78) Private Mortgage Insurance is usually required if the down payment is less than ________ percent of the purchase price of the home.

A) 5

B) 8

C) 12

D) 15

E) 20

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

79) What is the term used to describe the reduction of the balance owed on a loan with each payment made over a period of time?

A) A buy-down

B) Shared-appreciation

C) Prepaid interest

D) Amortization

E) A rate cap

Difficulty: 1 Easy

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

80) Money that is usually deposited with the lending institution for the payment of property taxes and homeowner's insurance is called:

A) points.

B) an escrow account.

C) a rate cap.

D) closing costs.

E) a buy-down.

Difficulty: 2 Medium

Topic: Escrow accounts

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

81) Most people do not select a place of residence based on:

A) lifestyle.

B) needs.

C) values.

D) attitudes.

E) credit score.

Difficulty: 1 Easy

Topic: Home purchase selection process

Learning Objective: 09-01 Evaluate available housing alternatives.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

82) A lease is a legal document that provides the right to take legal action by the ________ for nonpayment of rent.

A) landlord

B) builder

C) realtor

D) tenant

E) homeowner

Difficulty: 1 Easy

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

83) Which home improvement is least likely to increase the value of your home?

A) Energy-efficient features

B) A remodeled kitchen

C) An extra bathroom

D) A finished basement

E) An exercise room

Difficulty: 1 Easy

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

84) A payment cap on an adjustable-rate mortgage can result in negative amortization when:

A) interest rates decrease but the amount of the monthly payment does not.

B) the amount of the monthly payment increases and interest rates do not.

C) the amount of the monthly payment decreases and interest rates do not.

D) interest rates rise but the amount of the monthly payment does not.

E) the loan stretches out to 40 years.

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

85) Which of the following can help you prepare your home for selling?

A) Moving furniture to the garage

B) Painting worn exterior

C) Closing the drapes when showing your home

D) Trimming the grass around old vehicles in the yard

E) Turning off the lights to conserve energy when showing your home

Difficulty: 1 Easy

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

86) Which procedure is a security measure if you are selling your home without a real estate professional?

A) Closing the drapes when showing your home

B) Turning off the lights when showing your home

C) Showing your home only when two or more adults are at home

D) Clearing the garage of clutter before showing your home

E) Mowing the lawn before showing your home

Difficulty: 2 Medium

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

87) A real estate short sale occurs when:

A) you are selling the home without a real estate professional.

B) an appraisal is too costly to obtain.

C) an estimate of the current value of the property is not available.

D) the new selling price is less than the amount owed on a previous mortgage.

E) the home is sold for less than the list price.

Difficulty: 3 Hard

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

88) A home worth $160,000 with $80,000 still owed on the mortgage would have equity of $80,000, which is ________ percent of the home's value.

A) 20%

B) 50%

C) 60%

D) 67%

E) 80%

Explanation: $80,000 / $160,000 = 0.50 = 50%.

Difficulty: 2 Medium

Topic: Home equity loans

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

89) A home worth $250,000 with $100,000 still owed on the mortgage would have equity of:

A) $250,000

B) $200,000

C) $150,000

D) $100,000

E) $80,000

Explanation: $250,000 − $100,000 = $150,000

Difficulty: 1 Easy

Topic: Home equity loans

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

90) What is the affordable monthly mortgage payment if your yearly gross income is $48,000 and monthly payments on an auto loan are $320?

A) $4,800

B) $4,000

C) $1,500

D) $1,200

E) $320

Explanation: $48,000 / 12 = $4,000; $4,000 × 0.38 = $1,520; $1,520 − $320 = $1,200

Difficulty: 3 Hard

Topic: Home affordability and ratios

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Apply

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

91) Which of the following serves as collateral for the mortgage?

A) Your income

B) The amount of your down payment

C) The length of your loan

D) Current mortgage rates

E) The home you buy

Difficulty: 1 Easy

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

92) You believe that interest rates may drop and have decided not to lock in an interest rate on your loan during the loan commitment process. This is called a:

A) buy-down.

B) discount point.

C) float.

D) rate cap.

E) payment cap.

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

93) Which of the following is most commonly used as a base index for setting rates for adjustable rate mortgages?

A) Federal Reserve Bank

B) Karl's Mortgage Calculator

C) Realtor.com

D) London Interbank Offered Rate

E) Bankrate.com

Difficulty: 3 Hard

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

94) Your selection for a place of residence is most likely to be influenced by your:

A) lifestyle.

B) gender.

C) favorite restaurant.

D) credit score.

E) number of years employed.

Difficulty: 1 Easy

Topic: Home purchase selection process

Learning Objective: 09-01 Evaluate available housing alternatives.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

95) Which of the following is not an advantage of renting?

A) Ease of mobility

B) More long-term financial benefits than home ownership

C) Fewer responsibilities for maintenance and repairs

D) Lower initial costs

E) No expenses related to property taxes

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

96) Which of the following is a form of housing in which the units in a building are owned by a nonprofit organization?

A) Mobile home

B) Condominium

C) Cooperative housing

D) Duplex

E) Townhouse

Difficulty: 1 Easy

Topic: Housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

97) Which of the following can affect the price of a home?

A) Cost of the home inspection

B) Number of realtors in the area

C) Cost of the appraisal

D) Current mortgage rates

E) Number of loan officers in the area

Difficulty: 1 Easy

Topic: Home purchase financing alternatives

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

98) The main housing costs associated with renting are:

A) property taxes.

B) rent and utilities.

C) property insurance.

D) maintenance upkeep.

E) down payment.

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-02 Analyze the costs and benefits associated with renting.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

99) Jason Smith pays monthly rent of $1,250 and an annual premium for renter's insurance of $210. He realizes that he has lost interest of $36 from paying the security deposit. What is Jason's total annual cost of renting?

A) $246

B) $1,250

C) $1,496

D) $15,000

E) $15,246

Explanation: $1,250 × 12 months = $15,000; $15,000 + $210 + $36 = $15,246

Difficulty: 2 Medium

Topic: Rental costs and contracts

Learning Objective: 09-01 Evaluate available housing alternatives.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

100) Which of the following is an advantage of renting an apartment?

A) No tax benefits

B) Easy to move

C) Limitations regarding remodeling

D) Restrictions regarding pets

E) Higher utility expenses

Difficulty: 2 Medium

Topic: Rent versus buy decision

Learning Objective: 09-01 Evaluate available housing alternatives.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

101) Which of the following is not a benefit of tiny houses (usually 400 square feet or less)?

A) Lower home ownership costs

B) Environmentally friendly design

C) Less clutter

D) Limited privacy

E) A simpler lifestyle

Difficulty: 3 Hard

Topic: Evaluating housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

102) The Internet of Things (IoT) is the interconnection of devices embedded in household items to send and receive data and includes all of the following, except:

A) a smart thermostat.

B) a ceiling fan that only turns on and off when you speak.

C) a Wi-Fi-enabled coffee maker that is programmable.

D) a light bulb with a speaker that streams audio from an app.

E) an intelligent countertop oven.

Difficulty: 2 Medium

Topic: Evaluating housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

103) What is not true of lifestyle inflation?

A) A salary increase is received

B) Often results in increased debit

C) Often results in lower amounts saved

D) May result in overspending

E) Helps to maintain a frugal level of spending

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: automatic

104) Property taxes are based on the assessed value. Who determines this value and what can you do if you disagree with this assessment?

1. Know the appeal deadline. Contact the local assessor's office.

2. Check for mistakes, such as reporting incorrect square footage or incorrectly stating the number of bedrooms.

3. Determine the issues to emphasize. Note items that might affect the value of your home versus comparable homes in your area.

4. Prepare for the hearing. Gather evidence and prepare an organized presentation with photos and spreadsheets.

Difficulty: 2 Medium

Topic: Real and personal property taxes

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

105) What factors influence the type of housing a family will select?

Difficulty: 2 Medium

Topic: Home purchase selection process

Learning Objective: 09-01 Evaluate available housing alternatives.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

106) Jerry Watson is considering buying a home. What five actions would you recommend for him to take to accomplish this goal of buying a home?

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Remember

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

107) John Ashford needs to sell his home because of a job transfer to another city. What actions should John take to prepare his home for selling?

When selling a home, you should first prepare the property by:

1. Making needed repairs and painting worn exterior and interior areas.

2. Clearing the garage and exterior areas of toys, debris, and old vehicles.

3. Keeping the lawn cut and the leaves raked.

4. Keeping the kitchen and bathroom cleaned.

5. Avoiding offensive odors by removing garbage and keeping pet areas clean.

6. Removing excess furniture and other unneeded items to make the areas look larger.

7. Opening drapes and turning on lights when showing the home.

8. Using energy-saving lightbulbs and water-saving faucets.

9. Clean windows.

10. Make sure the house numbers are plainly visible.

Difficulty: 2 Medium

Topic: Home sales preparations and procedures

Learning Objective: 09-05 Develop a strategy for selling a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

108) What should you consider to determine the price you offer for a home?

Difficulty: 2 Medium

Topic: Home purchase considerations and negotiations

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

109) Explain what amortization is and how a down payment and loan duration impact it.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

110) Explain negative amortization and how such a situation can occur.

Difficulty: 2 Medium

Topic: Mortgage terms, rates, and payments; Home purchase financing alternatives

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

111) What is the purpose of an escrow account and what costs are typically included?

Difficulty: 2 Medium

Topic: Escrow accounts

Learning Objective: 09-04 Calculate the costs associated with purchasing a home.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual

112) Differentiate between a cooperative and a condominium. Be sure to include a discussion of the ownership and responsibility for the common areas.

In cooperative housing, the units in the building are owned by a nonprofit organization. The shareholders purchase stock to obtain the right to live in a unit in the building. The residents do not own the units but have the right to occupy a unit for as long as they own stock in the cooperative association. The title for the property belongs to the cooperative association. The cooperative is different from the condominium in which residents own their individual living units. Condominiums are individually owned housing units in a building with several units. Individual ownership does not include the commons areas such as hallways, outside grounds, and recreational areas. Common areas are owned by the condominium association, which is run by the people who own the housing units. Condominium owners are charged a monthly fee to cover the maintenance, repairs, improvements, and insurance for the building and common areas.

Difficulty: 3 Hard

Topic: Evaluating housing options

Learning Objective: 09-03 Explain the home-buying process.

Bloom's: Understand

Accessibility: Keyboard Navigation; Screen Reader Compatible

Gradable: manual