How Much Can You Afford? chapter 10 Sample Test

Which of the following is not true concerning

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9) Which of the following is not true concerning adjustable rate mortgages (ARMs)? A) There is usually a limit on how much a rate may increase per year. B) There is usually no limit on how much a rate may increase per year. C) There is usually a limit on how much a rate may increase over the life of the loan. D) The maximum increase over the life of the loan is usually 5%. Answer: B Diff: 2 Question Status: Previous edition 10.7 Decision to Own Versus Rent a Home 1) Renting is almost always a better financial option since owning a home has so many costs such as repair, insurance, and taxes. Answer: FALSE Diff: 1 Question Status: Previous edition 2) Which of the following would you not factor into a decision to buy or rent a house? 3) The total cost of owning a home versus renting is calculated by 4) If the rent on an apartment is $600 per month, which is equal to a mortgage payment on a house, how much additional tax savings will you realize if $200 of the monthly mortgage payment is interest and your tax bracket is 25 percent?
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5) In the decision to rent or purchase a home the ________ of any security deposit that you would put down on a rental home must be part of the decision. Answer: opportunity cost Question Status: Previous edition 10.8 Special Types of Mortgages 1) A balloon payment mortgage starts with higher payments, which decrease as the mortgage is paid off. Answer: FALSE Diff: 1 Question Status: Previous edition 2) If you anticipate your income rising slowly but steadily over the years, you may want to consider a A) 30-year fixed rate mortgage. B) 15-year ARM. C) graduated payment mortgage. D) balloon payment mortgage. Answer: C Diff: 2 Question Status: Previous edition 3) The type of mortgage that is usually the shortest term and will require further action at the end of it is a(n)
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  • Fall '12
  • ChrisThompkins
  • Interest Rates, fixed rate mortgage, Question Status, Previous Edition

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