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1.
Mortgage lenders may require that you purchase which of the following forms of insurance?
Hazard and title insurance. Lenders may require that you purchase hazard and title insurance, but may not require you to buy life insurance.
2.
All of the following items may receive favorable tax treatment, except _______.
Mortgage principal payments. While you may be able to deduct property taxes and the part of your mortgage payment that goes to interest on the loan, the principal portion of the monthly payment is not deductible.
3.
Because fixed-rate mortgage payments are amortized, the percentage of each payment that is applied to interest _______.
Decreases with time. With an amortization schedule, the portion of each monthly payment applied to interest decreases as your equity grows.
4.
All of the following are examples of capital improvements to a home except _______.
Repairing the driveway. The other projects increase or improve the livable area in your home and could increase its appraised value. Repairing the driveway is necessary, but only maintains what was already there.
5.
Joan makes $4,000 a month and pays $500 a month to long-term debts. How much of a home loan would she likely be pre-approved for?
$820. Twenty-five percent of Joan's salary is $1,000. Thirty-three percent is $1,320; if you subtract her long-term debt payments, you are left with $820. Since $820 is less than $1,000, it is the maximum monthly payment the lender will allow on any loan it considers making to Joan.