AnswersPersonal Finance - EL3403Mortgages and Home Ownership

Mortgages and Home Ownership — Unit test Answers

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The image and chart show the terms of a sample balloon payment mortgage.According to the terms of the sample balloon payment mortgage, what will most likely occur at the end of the regular payment term?

Question illustration
A
the remaining principal of $173,073 will be due immediately
B
the interest rate will change to decrease the monthly payment
C
the loan’s terms have all been met and it is paid in full
D
the monthly payments will increase due to an increase in principal
82
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Selma deposited a paycheck for $378.42. She’ll use the check register to record her transaction. What will be her new balance?

Question illustration
A
$2,257.99
B
$2,337.06
C
$3,014.83
D
$3,057.31
83

Sienna has a car loan with an annual interest rate of 4.8%. She will make the same monthly payment for 48 months, after which the loan will be paid back. Diego says that Sienna’s loan is an example of closed-end credit while Sienna says it is an example of open-end credit. Which statement about the loan is true?

A
Diego is correct because the loan has to be paid in full by a specific date.
B
Sienna is correct because she had to pledge collateral to get the loan.
C
Sienna is correct because the amount can be borrowed again after she repays the loan.
D
Diego is correct because the loan is a line of credit.
84

Beth withdrew $35 from her checking account. In which column should she record the $35 withdrawal?

Question illustration
A
Check Number
B
Debit
C
Deposit
D
Balance
85

Which statement is true of both mortgages and auto loans?

A
They are riskier than student loans for lenders.
B
They do not require a minimum payment.
C
They are secured loans and generally require a down payment.
D
They have higher interest rates than credit cards.
86

Which statement is true of both mortgages and auto loans?

A
They are riskier than student loans for lenders.
B
They do not require a minimum payment.
C
They are secured loans and generally require a down payment.
D
They have higher interest rates than credit cards.
87

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.
88

Which helps to establish a negative credit history?

A
Make payments on or before the due date.
B
Never miss a payment.
C
Pay off the full amount with the first monthly statement.
D
Pay less than the minimum amount due.
89

An example of secured credit is a

A
payday loan.
B
credit card.
C
mortgage.
D
medical bill.
90

In determining whether to issue a loan, banks are not allowed to ask about an applicant’s

A
employment history.
B
date of birth.
C
country of origin.
D
income tax returns.
91

Yoko is buying a car from a local car dealership. She wants to get the lowest interest rate possible. Which will most likely help her get the lowest interest rate?

A
asking nicely
B
making sure she has a positive credit history
C
explaining that she has many outstanding loans
D
showing her driver’s license
92

Simon used a credit card to buy a skateboard. Which statement is true about his method of payment?

A
Simon paid cash at the store.
B
Simon used money directly from his bank account.
C
Simon will receive the bill later.
D
Simon made the purchase with money he saved.
93

Maura had to get a $350 emergency loan at a very high interest rate to pay for dental work. The lender did not need her credit history. If she does not pay back the loan within three weeks, she will have to pay an extra $50. Raina says the loan is an example of easy-access credit while Maura says it is an example of open-end credit. Which statement about the loan is correct?

A
Raina is correct because the loan is a line of credit.
B
Maura is correct because the loan has an interest rate.
C
Raina is correct because the loan has a large fee if it is not repaid on time.
D
Maura is correct because the loan does not have an annual fee.
94

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.
95

Becca has $500 to open a checking account. She wants an account with the lowest fees. She writes about 12 checks per month and her employer has direct deposit. She plans to only use her bank’s ATM four times a month. Bank Account Terms and ConditionsWhich checking account would be best for Becca?

Question illustration
A
Account A
B
Account B
C
Account C
D
Account D
96

This year, Mr. Thomas has a higher credit score than he did last year. Which of the following should Mr. Thomas expect with the improved score? Check all that apply.

A
a more difficult time borrowing money to buy a house
B
an easier time getting a car loan
C
an easier time renting an apartment
D
a denial when opening a bank account
E
higher interest rates on credit cards
97

Lois bought clothing at a store. She did not have enough in her bank account to pay for the purchase. After receiving the bill and paying off the balance, she realized that she paid $9.69 in interest. Which statement is true about her method of payment?

A
Lois used a debit card to make the purchase.
B
Lois used a credit card to make the purchase.
C
Lois either used a debit card or used a credit card and paid the balance in full when the bill arrived.
D
Lois either used a debit card or used a credit card and made a single payment.
98

Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?

A
It shows that Casey prefers a high-interest rate.
B
It shows that Casey is committed to paying off the loan.
C
It shows that Casey may not need a loan at all.
D
It shows that Casey might refinance the loan soon.
99

A credit score is based in part on

A
employment and race.
B
income and location.
C
employment and trust.
D
payment history and total debt.
100

Caitlyn has a credit card with a spending limit of $1500 and an APR (annual percentage rate) of 18%. During the first month, Caitlyn charged $375 and paid $250 of that in her billing cycle. Which expression will find the amount of interest Caitlyn will be charged after the first month?

A
(0.18) (250 dollars)
Option A
B
(0.015) (375 dollars)
Option B
C
(0.18) (375 dollars)
Option C
D
(0.015) (125 dollars)
Option D

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