Exam Final

Question 1

How is a single family dwelling different from a condominium?

Answer 1

Single Family: Housing unit that is detached from other units

Condos: Housing units area attached to each other.
Ownership with the owners holding legal title to their own housing unit among many, with common grounds and facilities owned by the developer or homeowner association

Question 2

Discuss the items you must pay up-front to be able to rent an apartment, and the amount of money needed for item.

Yes, not all apartments charge the same, but give some generalities as if you were the apartment manager renting the apartment to someone.

Answer 2

When you rent you have to pay upfront the first month’s rent, a security deposit of usually one month, and a damage deposit. And maybe a pet fee of $500. So you need $2500 to move into an $800/month apartment.

Question 3

What does it mean to be “upside down” in your car? P. 229

Answer 3

A situation where the owner of a financed assets owes more than it is worth, thus creating negative equity.

Question 4

In the presentations of personal professions what are some things that you need regardless of which profession you work in?

Answer 4

Usually a GED or high school diploma 
Communication Skills
Good work ethic
Flexible 
Problem Solving Skills

Question 5

What is the difference between a “want” and a “need?”

Answer 5

Need: Item thought to be necessary.

Want: Item not necessary but desired

Question 6

Describe the difference between a debit card, a credit card, and a retail store (gift) card

Answer 6

Debit Card: Can access money from checking account. Funds are instantaneously removed from checking account

Credit Card: Cards that allow repeated use of credit as long as the consumer makes regular monthly payments

Retail (gift) Card: Allows a customer to make purchases on credit at any of the outlets of a particular retailer or retail chain

Question 7

Define broker’s commission.

Answer 7

Largest selling cost in selling a home; these commissions often amount to 6 percent of the selling price of the home.

Question 8

What is the usual broker’s commission for selling a house?

Answer 8

6%

Question 9

Be able to do a problem similar to Chp. 6 Math #1.

Answer 9

P. 193 Disposable income

Question 10

Be able to do a problem similar to Chp. 7 Math #1.

Answer 10

p. 218

Question 11

Be able to do a problem similar to Chp. 8 Math #1.

Answer 11

p. 243

Question 12

What does your credit score have to do with obtaining an apartment?

Answer 12

A person will look at it to make sure you would pay them and would have the funds to pay them.

Credit Score indicates whereto or not the person has enough disposable income to make the payments

Question 13

Once you rent or buy a house, what does your credit score have to do with utility hook-up’s?

Answer 13

Only thing will determine if and how much of a deposit you have to make

Question 14

When buying a new car what document can you get from Consumer Reports that will help you determine what you will offer to pay the dealer

Answer 14

You can get the repair ratings form Consumer Reports

Question 15

What is a rebate on a purchase?

Answer 15

The seller refunds a portion of the purchase price of the product either as a direct payment or a credit against future purchases ( freq. a gift card)

Question 16

Why do companies offer rebates instead of reducing the price?

Answer 16

Because a lot of times the customer will not take the time to fill out the forms and mail them in. so the seller gets the full price of the item. The Seller is more likely to get more money

Question 17

What is “gap” insurance?

Answer 17

It pays off the remainder of the loan if the insurance payment is insufficient to do so. Because the insurance only pays what the car is worth of the time of wreck not what you have left to pay on the loan.

Question 18

What is the minimum down payment percentage you should pay when you purchase a house so that you obtain a low interest loan and do not have to pay PMI?

Answer 18

20%

Question 19

What is the relationship between your credit score and the interest rate you will be charged for a mortgage?

Answer 19

The lower your credit score the more interest you will have to pay on a mortgage

Question 20

What should you do when you when a product is sold and a rebate is offered?

Answer 20

You should imminently fill out the rebate and send or email it in.

Question 21

Discuss the good and bad of rebates on vehicle purchases?

Answer 21

Good: You get money back
Bad: Is that instead of putting the rebate back into the car on paying the loan payment down they spend it on something else and end up paying more in interest than the rebate ?

Question 22

What is PITI?

Answer 22

Elements of monthly real estate payment consisting of principal, interest, real estate taxes, and home owners insurance

Question 23

What is PMI, and when are you required to obtain it?

Answer 23

Priviate Mortgage Insurance

Mortgage insurance obtained from a private comapny

Question 24

What is good and bad about a car lease?

Answer 24

Good: New car for 36, 42, 48 months.

Bad: Turn in at end of that time and nothing to show for it. Lease signing cost of up to $3500 on front-in.

Question 25

What does it mean to be “under water” in your house?

Answer 25

A person owes more on the house than what it is worth

Question 26

What is meant by “closing” on a house?

Answer 26

That you are transferring ownership! It makes the deal complete, you are closing out everything

Question 27

What is an escrow account, and how does it impact monthly mortgage payments? What are two items in an escrow account?

Answer 27

Special reserve account at a financial institution in which funds are held until they are paid to a third party --- in this case, for home insurance and for property taxes Lender usually require that monthly installments be paid into an escrow account Taxes and Insurance

Question 28

What did I say about the financing concept of a new housing development in Greenville?

Answer 28

I said it was in Hollingsworth Park, but it is actually being developed by the Hartness Corp. off Garlington Road and Pelham Road.

Question 29

Name six things that must be paid at closing?

Answer 29

``` Realtor Fees Lawyers Fees Appraisal Fees Deed Stamps (Transfer of the deed) Loan Origination Fee Discount Points Loan Applications Fees Credit Report Fees ```

Question 30

Name the three methods to calculate finance charges. Tell who is favored by each, and which one is best for you.

Answer 30

1) Declining-balance method is fair to both lender and borrower. 2) Add-on method favors the lender. $2000 – 2 yrs @ 9% $2000(2)(0.09) = $360 ($2000+$360)/24 = $98.33 3) Discount method favors lender since all interest is paid up front. $2000(2)(0.09) = $360 $2000-$360 = $1640 loan $2000/24 = $83.33

Question 31

What is an early payment penalty?

Answer 31

Special charge assessed to the borrower for paying off a loan early.

Question 32

Be able to calculate a monthly mortgage loan payment when given the payment period in years, interest rate, and amount borrowed.

Answer 32

This is Table 9.4. Also calculate total payments over life loan and amount of interest paid. See also Table 9.5