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1.
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.
2.
The current market value of your home, minus what you owe on it, is commonly known as your _________.
Home equity. Your home equity is the difference between what you own (the current market value of your property) and what you owe on the property.
3.
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.
4.
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.
5.
Capital gains on your home are taxed _______.
All of the above. The first $500,000 of capital gains on the sale of your home ($250,000 for single filers) can be excluded from your federal income tax, but this break is available only once every two years.