#1
Which of the following is not a factor to consider when deciding to rent or buy a home?
Current fashion trends
ExplanationFashion trends do not affect the financial decision of renting or buying a home.
#2
What is the recommended percentage of your income to spend on housing expenses?
Between 20% and 30%
Explanation20% to 30% of income is advised to be spent on housing expenses for financial stability.
#3
What is the purpose of a home inspection in the home buying process?
To determine the need for repairs
ExplanationHome inspection assesses the condition of a property to identify necessary repairs.
#4
Which type of mortgage has a fixed interest rate for the life of the loan?
Fixed-rate mortgage
ExplanationFixed-rate mortgages maintain a constant interest rate throughout the loan duration.
#5
What is the primary purpose of a home appraisal?
To estimate the market value of the home
ExplanationHome appraisal determines the fair market value of a property.
#6
Which of the following is a potential benefit of renting a home?
Flexibility to move
ExplanationRenting offers flexibility to relocate without the commitment of homeownership.
#7
What is a common closing cost associated with buying a home?
Loan origination fees
ExplanationLoan origination fees are standard expenses incurred during the home purchase closing process.
#8
What is the 28/36 rule in mortgage lending?
A guideline for the maximum percentage of income that should be spent on housing expenses
ExplanationThe 28/36 rule advises that no more than 28% of income should be allocated to housing costs, and total debt payments should not exceed 36%.
#9
What is private mortgage insurance (PMI) used for?
To protect the lender in case of default
ExplanationPMI safeguards the lender against borrower default on mortgage payments.
#10
What is the purpose of a home warranty?
To cover the cost of repairs to home systems and appliances
ExplanationHome warranty policies provide coverage for repairs or replacements of household systems and appliances.
#11
Which of the following is a potential disadvantage of buying a home?
Responsibility for maintenance and repairs
ExplanationHomeownership entails the obligation of maintaining and repairing the property.
#12
What is the difference between a conventional loan and an FHA loan?
A conventional loan requires a higher down payment than an FHA loan
ExplanationConventional loans typically necessitate larger down payments compared to FHA loans.
#13
What is the purpose of a deed in real estate?
To transfer ownership of a property from the seller to the buyer
ExplanationDeeds legally transfer property ownership rights from one party to another.
#14
What is the purpose of a pre-approval letter in the home buying process?
To provide an estimate of the loan amount a buyer qualifies for
ExplanationPre-approval letters indicate the maximum loan amount a borrower is eligible to receive based on financial assessment.