Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
3.
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.
4.
Building in a peaceful, secluded area away from other development is a good way to enhance the value of your home.
False. While seclusion may sound idyllic, the best way to increase your home's value is to build where lots of other people want to live–near cities and other sources of economic development.
5.
An amount paid to secure a real estate agreement is called _______.
Earnest money. To secure the agreed price, the buyer is expected to give earnest money to the seller to secure the agreement.