AnswersPersonal Finance - EL3403Mortgages and Home Ownership

Mortgages and Home Ownership — Unit test Answers

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Open-end credit is

A
a loan given for a short period of time that is not dependent on credit history.
B
pledged to a company as security for a loan repayment.
C
an amount of time during which a loan can be repaid without interest.
D
an agreement with an institution on a certain amount that can be repeatedly borrowed.
62
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Martin puts his weekly paycheck into his checking account. In which column should he write the value of his paycheck?

Question illustration
A
Deposits
B
Balance
C
Debit
D
Check number
63

Which best describes a way people can use personal loans?

A
to buy a house
B
to buy a car
C
to pay for college
D
to pay for groceries
64

Terrell has $300 to open a checking account. He plans to use the ATM four times per month at his local branch. He does not overdraft his account. Bank Account Terms and ConditionsWhich checking account would be best for Terrell?

Question illustration
A
Account A
B
Account B
C
Account C
D
Account D
65

Ming made a car insurance payment of $122.50. He’ll use the check register to record his transaction. What will be his new balance?$

Question illustration
Answer not available
66

Which helps to establish a negative credit history?

M
Make payments on or before the due date.
N
Never miss a payment.
P
Pay off the full amount with the first monthly statement.
P
Pay less than the minimum amount due.
67

The chart shows the costs associated with the purchase of a new home.

Question illustration
A
It is too expensive for most people to buy a new home.
B
There are additional fees and costs involved in taking out a mortgage.
C
Making a down payment means taxes do not have to be paid.
D
Fees and taxes make up about 50 percent of the costs of buying a home.
68

The table shows the terms of a fixed-rate mortgage.

Question illustration
A
M = P StartFraction Left-bracket R (1 minus R) Superscript n Baseline Right-bracket Over (1 + R) Superscript n Baseline EndFraction
Option A
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
Option B
C
M = P StartFraction R Over left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option C
D
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over (N + R) EndFraction
Option D
69

Read the scenario.Jay and Laura have been dreaming of purchasing their first home together. They've been diligently saving and have managed to accumulate a significant sum for a down payment.How does their decision to make a larger down payment benefit their financial situation as they purchase a home?

A
It increases the interest rate on the loan.
B
It decreases their credit score.
C
It increases the home’s value.
D
It decreases their monthly payment.
70

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.
71

A lender is assessing customers for loans. The credit scores of four customers are below.IdaCorrineBruceRoland820550390610Which person will the lender assess as having the lowest risk?

A
Ida
B
Corrine
C
Bruce
D
Roland
72

Paul wrote a check to the dentist for $345.69. He’ll use the check register to record his transaction. What will be his new balance?

Question illustration
A
$704.73
B
$720.62
C
$1,233.58
D
$1,579.27
73

Sarah transferred $450.00 from her savings account to her checking account. She’ll use the check register to record her transaction. What will be her new balance?$

Question illustration
Answer not available
74

Xavier buys a computer for $525, which includes taxes. He pays for the computer over a 12-month period by paying $48.13 per month. Which statement about Xavier’s purchase is most likely true?

A
He used a debit card to make the purchase and paid exactly $525 for the computer.
B
He used a debit card to make the purchase and paid an additional $52.56 in interest.
C
He used a credit card to make the purchase and paid exactly $525 for the computer.
D
He used a credit card to make the purchase and paid an additional $52.56 in interest.
75

Which describes the difference between secured and unsecured credit?

A
Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
B
Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.
C
Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.
D
Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.
76

The table shows a schedule of Igor’s payment plan for a used car. Igorr’s Payment Plan for the First Three YearsYearBalanceMonthly PaymentEnd of YearBalance1 $245.33 2 $245.33$8,831.883 $245.33 How much is Igor’s total closed-end credit for the car?

A
$11,775.84
B
$14,719.80
C
$23,551.68
D
$26,495.64
77

Martin puts his weekly paycheck into his checking account. In which column should he write the value of his paycheck?

Question illustration
A
Deposits
B
Balance
C
Debit
D
Check number
78

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 neighbors
B
to plan how to pay off the money they have borrowed
C
to set aside enough money to refinance the loan
D
to figure out how long they can stay in their home
79

Which accurately describes the terms of this mortgage? Check all that apply.

A
The homeowner is borrowing $360,000.
B
The monthly interest rate is 4 percent.
C
Monthly payments must be made for 30 years.
D
The annual interest rate is 4.8 percent.
E
The homeowner is borrowing $200,000.
F
Monthly payments must be made for 360 years.
80

Fido wants to buy a new car. He will need to get a car loan. Fido decides to wait for a few months until his credit history improves. Which explains whether Fido is making a sensible decision?

A
Fido’s decision is sensible because the selling price of the car should be less in a few months.
B
Fido’s decision is sensible because the cost of the car loan should be less if his credit history improves.
C
Fido’s decision is not sensible because he needs the car right away.
D
Fido’s decision is not sensible because it does not matter if he buys the car now or in a few months.

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