Mortgages and Home Ownership — Unit test Answers
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1
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The table shows the terms of a fixed-rate mortgage.
A
M = P StartFraction Left-bracket R (1 minus R) Superscript n Baseline Right-bracket Over (1 + R) Superscript n Baseline EndFraction
B
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over Left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
C
M = P StartFraction R Over left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
D
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over (N + R) EndFraction
2
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A balloon payment mortgage makes the best sense for borrowers who are
A
fearful of taking risks when borrowing money.B
planning on selling their homes before the term of the loan ends.C
looking to avoid borrowing money from banks.D
anticipating losing their jobs in the next few years.3
What impact might an economic downturn have on a borrower’s fixed-rate mortgage?
A
It might cause a borrower’s payments to go up.B
It might cause a borrower’s payments to go down.C
It has no impact because a fixed-rate mortgage cannot change.D
It has no impact because the economy does not affect interest rates.4
If someone buys a home for $200,000 and makes a 20 percent down payment, that person will have to
A
pay $20,000 up front.B
pay $40,000 up front.C
take out a mortgage for $200,000.D
take out a mortgage for $220,000.5
[BLANK]
A
interestB
feeC
pointD
principal6
The graph shows the average price of homes in the United States from 2009 to 2014.
A
The cost of a new home in the United States will continue to be inexpensive.B
Rising home prices in recent years means that more people will need to take out mortgages.C
More people will be able to pay cash for new homes and not need to take out a mortgage.D
Based on recent trends, fewer people will need mortgages in the future.7
A borrower with bad credit is likely to be charged
A
a low interest rate.B
a high interest rate.C
no interest rate.D
higher property taxes.8
What impact might an economic downturn have on a borrower’s fixed-rate mortgage?
A
It might cause a borrower’s payments to go up.B
It might cause a borrower’s payments to go down.C
It has no impact because a fixed-rate mortgage cannot change.D
It has no impact because the economy does not affect interest rates.9
What is the best reason for homebuyers to create a budget before taking out a mortgage?
A
to compare the value of their home with that of their neighborsB
to plan how to pay off the money they have borrowedC
to set aside enough money to refinance the loanD
to figure out how long they can stay in their home10
The chart shows the costs associated with the purchase of a new home.
A
cost of making repairs to the new home.B
fees that must be paid to local schools.C
costs associated with obtaining the loan.D
fees assessed by the state or local government.Did you find these answers helpful?
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