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FCS 340 Exam 3 Questions and answers
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FCS 340 Exam 3 Questions and answers
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FCS 340 Exam 3 Questionsand answers
Traditional financial guidelines suggest that your home should cost about
__________ times your annual income
2 1/2 or (25 or 30 percent of your take-home pay)
List advantages of renting
Easy to move ; Fewer responsibilities for maintenance; Minimal financial
commitment
Brainpower
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List disadvantages of renting
No tax benefits; Limitations regarding remodeling; Restrictions regarding
pets, other activities
The opportunity to have another person take over rent payments and live
in the rental unit is called __________________________.
Subletting
List advantages of buying a home
Pride of ownership; financial benefits; lifestyle flexibility
List disadvantages of buying a home
Financial commitment; Higher living expenses; limited mobility
A legal form of ownership in which the owners pay a monthly fee for
maintenance of the common areas
Condominium
List important factors to consider when selecting a contractor to build a
home
contractor's experience and reputation; contractors relationship with the
architect, material suppliers, electricians, plumbers, carpenters, etc.;
payment arrangements during construction
In order to purchase a home, most people need to save for a
_______________________ before purchasing
Down Payment
, List important considerations in choosing a home to purchase
Location; price & quality; zoning laws, schools
What should a home buyer consider when evaluating the actual house?
Home Inspection (Required by mortgage company), Exterior Facilities,
Exterior Construction, Interior Construction, Interior Design
What does the real estate agent do?
show homes that meet your needs; present your offer; negotiate the price;
assist in obtaining financing; and represent you at the closing
When buying an older house, a buyer should get a ____________________ to
find out about possible problems with the house.
Home Inspection
After submitting an offer on a house, the seller may choose to provide
a________________, rejecting the submitted offer
counteroffer
What is a contingency clause?
states the purchase agreement of a home is binding only if a certain event
occurs; i.e. the contract may be valid only if the buyer obtains financing
for the home purchase within a certain time perior
What is an appraisal?
An assessment of the market value of the property
Why does the mortgage company conduct an appraisal?
Because they are not going to lend more money out than what the house
is worth
What is earnest money?
A portion of the purchase price of the home deposited as evidence of good
faith
Define points
Prepaid interest charged by the lender, Each discount point is equal to 1
percent of the loan amount and should be viewed as a premium you pay
for obtaining a lower mortgage rate.
What is PMI? When is a buyer required to purchase it?
Private Mortgage Insurance; for loans with loan-to-value (LTV)
percentages in excess of 80% (the buyer put down less than 20% of the
home's value upon purchase).
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