Financial Literacy for Homebuyers Quiz

Test your knowledge on mortgages, down payments, APR, PMI, and more with this quiz designed for homebuyers. Learn key concepts of real estate finance.

Practice Learn Test

Which of the following is a common type of mortgage?

Variable Rate Mortgage

Fixed Rate Mortgage

Floating Rate Mortgage

All of the above

What is the down payment when buying a house?

A payment made to the seller

A payment made to the real estate agent

A payment made to the lender

A portion of the total purchase price paid upfront by the buyer

What is a home inspection?

An appraisal of the property's market value

An assessment of the property's structural condition and systems

A review of the homeowner's insurance policy

An examination of the neighborhood's amenities

What is the purpose of a home warranty?

To protect the buyer against defects in the property's title

To provide insurance coverage for damage to the home caused by natural disasters

To cover the cost of repairs or replacements for certain home systems and appliances

To insure the buyer against the risk of defaulting on the mortgage

What is the typical length of a mortgage loan term in the United States?

10 years

15 years

30 years

40 years

What does APR stand for in the context of home loans?

Annual Payment Rate

Annual Percentage Rate

Adjustable Payment Rate

Adjusted Percentage Rate

What is private mortgage insurance (PMI)?

Insurance protecting the lender in case the borrower defaults

Insurance protecting the borrower in case of property damage

Insurance protecting the real estate agent's commission

Insurance protecting the seller in case of fraud

What is the role of a title search in the home buying process?

To verify the authenticity of the buyer

To determine the value of the property

To ensure there are no outstanding liens or claims on the property

To calculate property taxes

What does PITI stand for in the context of mortgage payments?

Principal, Interest, Taxes, Insurance

Property, Interest, Taxes, Income

Principal, Income, Taxes, Insurance

Property, Insurance, Taxes, Interest

#10

What is the purpose of a pre-approval letter in the home buying process?

To show the seller that the buyer is serious and financially capable of purchasing the property

To indicate that the buyer has already made an offer on the property

To provide legal permission to view the property before making an offer

To confirm that the buyer has paid the earnest money deposit

#11

What is the debt-to-income ratio used for in mortgage lending?

To determine the interest rate

To assess the borrower's ability to repay the loan

To calculate the home's market value

To determine the lender's profit margin

#12

What is an escrow account in the context of a mortgage?

An account where the buyer deposits funds for the down payment

An account where property taxes and insurance payments are held and paid by the lender

An account where the seller deposits funds after closing

An account where the lender deposits funds for future home repairs

#13

What is the difference between a mortgage broker and a loan officer?

Mortgage brokers work for lenders, while loan officers work for borrowers

Mortgage brokers are only involved in commercial real estate transactions

Loan officers can only offer mortgage products from a single lender, while mortgage brokers can offer products from multiple lenders

Mortgage brokers do not need to be licensed, while loan officers do

#14

What is the difference between a deed and a title?

A deed is proof of ownership, while a title is a legal document showing ownership rights

A title is a physical document, while a deed is a legal concept

A title is only issued by the government, while a deed is created by the property owner

A deed is issued by a lender, while a title is issued by a title company