Question 1

One advantage to a fixed-rate mortgage is that the lender typically will not charge the borrower any loan origination fee. ​

Accepted Answer

A fixed-rate mortgage often comes with various fees, including a loan origination fee. The advantage of a fixed-rate mortgage is the stability of the interest rate over the life of the loan, not the absence of fees.

Question 2

For 20 years, homeowner A and homeowner B both paid $1,500 per month on their 30-year, seven percent mortgages. Homeowner A lived in the same home and paid on the same mortgage the entire period. Homeowner B moved three times, but each time obtained a 30-year, seven percent mortgage and paid $1,500 per month. A's home and B's home both rose in value by two percent per year. After the 20 years, A and B will have the same amount of wealth from their home investments.​

Accepted Answer

Homeowner A, by staying in the same home and paying on the same mortgage for 20 years, would have built up more equity in their home due to the amortization of the mortgage (more of each payment goes towards the principal over time). Homeowner B, by moving and restarting the mortgage process three times, would have spent more on upfront costs (like closing costs) each time and would have less equity because more of their payments would have gone towards interest rather than principal. Additionally, the compounding effect of home value appreciation would favor Homeowner A, as they would have a higher base value for the appreciation calculation after the initial purchase.

Question 3

In general, home sales have changed from a "Let the buyer beware" to a "Let the seller beware" market.

Accepted Answer

This shift reflects the increasing obligations on sellers to disclose known defects and issues with their property, moving away from the traditional caveat emptor (let the buyer beware) approach towards more consumer protection for buyers in the real estate market.

Question 4

After a sales agreement is signed, the buyer may thoroughly inspect the home (personally or by using professional inspectors) and demand the seller make any "necessary" repairs. Serious disputes can follow if the surprised seller objects to making such repairs, because a contract already has been signed.​

Accepted Answer

After a sales agreement is signed, the buyer typically has the right to inspect the home and can negotiate repairs or adjustments based on the findings. This can lead to disputes if the seller is unwilling or unable to make the requested repairs, despite the existing contract.

Question 5

A homeowner's monthly mortgage payment often includes or combines sums of money for payment of property taxes and casualty insurance with the sum for principal and interest on the mortgage. ​

Accepted Answer

This is known as an escrow account, where the lender collects additional funds with the mortgage payment to pay for property taxes and insurance premiums on behalf of the homeowner.

Question 6

The offer to buy real estate is usually made on a standard form document called a purchase agreement and deposit receipt.​

Accepted Answer

A purchase agreement and deposit receipt is a standard form document commonly used to make an offer to buy real estate, outlining the terms and conditions of the sale and the deposit to be held in escrow.

Question 7

One advantage to an adjustable interest rate mortgage (ARM) is that the lender typically will not charge the borrower any loan origination fee. ​

Accepted Answer

Lenders can still charge loan origination fees on an adjustable-rate mortgage (ARM); the advantage of an ARM is usually a lower initial interest rate compared to fixed-rate mortgages, not the absence of origination fees.

Question 8

The market practices governing home sales are tightly governed by the National Association of Realtors.^TM

Accepted Answer

The National Association of Realtors (NAR) is a professional organization that establishes and enforces ethical standards for real estate agents and brokers. NAR's Code of Ethics and Standards of Practice govern the conduct of its members, including the practices surrounding home sales.

Question 9

The term impound account is another term used to describe a homeowners equity.​

Accepted Answer

An impound account is used by mortgage lenders to pay property taxes and insurance on behalf of the homeowner, not to describe a homeowner's equity.

Question 10

It is generally believed and a common saying that the most important factor in selecting a home is price, price, price.​

Accepted Answer

The most common saying regarding the most important factor in selecting a home is "location, location, location," emphasizing the importance of the geographical setting over price.

Question 11

The size of each payment required to amortize an adjustable interest rate mortgage (ARM) may remain constant even though the adjustable interest rate may increase from time to time. ​

Accepted Answer

The size of each payment required to amortize an adjustable interest rate mortgage (ARM) may remain constant even though the adjustable interest rate may increase from time to time because the loan is structured so that the payment amount is adjusted to ensure that the loan is paid off in full by the end of the loan term.

Question 12

One advantage of a non-judicial foreclosure to the buyer is the debtor lacks the right of redemption.​

Accepted Answer

In a non-judicial foreclosure, the debtor does not have the right to redeem the property after the foreclosure sale, unlike in a judicial foreclosure.

Question 13

All other things being equal, the longer the repayment term, the lower the monthly payments required to amortize (repay) a typical mortgage loan and the larger the total amount of cumulative interest that must be paid ​

Accepted Answer

Longer repayment terms spread the principal amount over more months, reducing the monthly payment but increasing the total interest paid over the life of the loan due to the longer period of interest accumulation.

Question 14

It is illegal for a person to sell their own home themselves unless they possess a real estate license.​

Accepted Answer

Homeowners can sell their own property without a real estate license. This is known as a For Sale By Owner (FSBO) transaction.

Question 15

Commonly regarded advantages of home ownership are the sense of community, stability and security.

Accepted Answer

Homeownership often provides a sense of community, stability, and security as it allows individuals to establish long-term roots in a neighborhood, contributing to a stable living environment and a sense of belonging.

Question 16

A real estate agent employed by the buyer to find attractive homes to purchase is called the listing agent.​

Accepted Answer

A real estate agent employed by the buyer to find attractive homes is called the buyer's agent, while the listing agent represents the seller.

Question 17

A variable interest rate mortgage (VIRM) is the same thing as an adjustable rate mortgage (ARM).  ​

Accepted Answer

Both terms refer to a type of mortgage where the interest rate applied to the outstanding balance varies throughout the life of the loan based on an index that reflects the cost to the lender of borrowing on the credit markets.

Question 18

Interest rates required by a variable interest rate mortgage (VIRM) typically are capped (i.e., limited) as to how much they can be adjusted at any one time. ​

Accepted Answer

Variable interest rate mortgages often have caps that limit the amount by which the interest rate can be adjusted during each adjustment period, as well as over the life of the loan, to protect borrowers from drastic increases in payments.

Question 19

All other things being equal, the lower the interest rate; the lower the monthly payments required to amortize (repay) a typical mortgage loan.

Accepted Answer

Lower interest rates reduce the amount of interest paid over the life of the loan, thereby decreasing the monthly payment needed to amortize the loan within its term.

Question 20

Money borrowed and secured with a home equity loan can only be used for home improvements. ​

Accepted Answer

Money borrowed through a home equity loan can be used for any purpose, including debt consolidation, college tuition, or personal expenses, not just home improvements.

Quiz 9: Real Property and Home Ownership

One advantage to a fixed-rate mortgage is that the lender typically will not charge the borrower any loan origination fee. ​

In general, home sales have changed from a "Let the buyer beware" to a "Let the seller beware" market.

A homeowner's monthly mortgage payment often includes or combines sums of money for payment of property taxes and casualty insurance with the sum for principal and interest on the mortgage. ​

The offer to buy real estate is usually made on a standard form document called a purchase agreement and deposit receipt.​

One advantage to an adjustable interest rate mortgage (ARM) is that the lender typically will not charge the borrower any loan origination fee. ​

The market practices governing home sales are tightly governed by the National Association of Realtors.TM​

The term impound account is another term used to describe a homeowners equity.​

It is generally believed and a common saying that the most important factor in selecting a home is price, price, price.​

The size of each payment required to amortize an adjustable interest rate mortgage (ARM) may remain constant even though the adjustable interest rate may increase from time to time. ​

One advantage of a non-judicial foreclosure to the buyer is the debtor lacks the right of redemption.​

All other things being equal, the longer the repayment term, the lower the monthly payments required to amortize (repay) a typical mortgage loan and the larger the total amount of cumulative interest that must be paid ​

It is illegal for a person to sell their own home themselves unless they possess a real estate license.​

Commonly regarded advantages of home ownership are the sense of community, stability and security.

A real estate agent employed by the buyer to find attractive homes to purchase is called the listing agent.​

A variable interest rate mortgage (VIRM) is the same thing as an adjustable rate mortgage (ARM). ​

Interest rates required by a variable interest rate mortgage (VIRM) typically are capped (i.e., limited) as to how much they can be adjusted at any one time. ​

All other things being equal, the lower the interest rate; the lower the monthly payments required to amortize (repay) a typical mortgage loan.

Money borrowed and secured with a home equity loan can only be used for home improvements. ​

One advantage to a fixed-rate mortgage is that the lender typically will not charge the borrower any loan origination fee.

A homeowner's monthly mortgage payment often includes or combines sums of money for payment of property taxes and casualty insurance with the sum for principal and interest on the mortgage.

The offer to buy real estate is usually made on a standard form document called a purchase agreement and deposit receipt.

One advantage to an adjustable interest rate mortgage (ARM) is that the lender typically will not charge the borrower any loan origination fee.

The market practices governing home sales are tightly governed by the National Association of Realtors.^TM

The term impound account is another term used to describe a homeowners equity.

It is generally believed and a common saying that the most important factor in selecting a home is price, price, price.

The size of each payment required to amortize an adjustable interest rate mortgage (ARM) may remain constant even though the adjustable interest rate may increase from time to time.

One advantage of a non-judicial foreclosure to the buyer is the debtor lacks the right of redemption.

All other things being equal, the longer the repayment term, the lower the monthly payments required to amortize (repay) a typical mortgage loan and the larger the total amount of cumulative interest that must be paid

It is illegal for a person to sell their own home themselves unless they possess a real estate license.

A real estate agent employed by the buyer to find attractive homes to purchase is called the listing agent.

A variable interest rate mortgage (VIRM) is the same thing as an adjustable rate mortgage (ARM).

Interest rates required by a variable interest rate mortgage (VIRM) typically are capped (i.e., limited) as to how much they can be adjusted at any one time.

Money borrowed and secured with a home equity loan can only be used for home improvements.