Guide to Homeownership

Section Quiz

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What has been the traditional down payment amount to purchase a home?

a. 20 percent
b. 15 percent
c. 10 percent
d. 5 percent

In determining housing affordability, lenders will review the following information:

a. down payment amount
b. credit history
c. outstanding debts
d. all of the above

What is an escrow account?

a. an account for holding taxes and insurance payments
b. an account for holding monthly mortgage payments
c. an account for holding hazard insurance payments
d. an account for holding flood insurance payments

What are the advantages of an FHA loan?

a. low down payment requirements
b. wide range of rate, term, and costs options
c. flexible qualifying guidelines
d. all of the above

What is PMI Insurance?

a. insurance that protects lenders against natural disasters
b. insurance that protects lenders against damages to the home
c. insurance that protects lenders against loss if a borrower defaults
d. insurance that protects lenders from fire hazards

A mortgage is divided into four parts, which of the following parts is correct?

a. principal, interest, taxes, insurance
b. principal, interest, APR, taxes
c. principal, interest, income, debts
d. none of the above

What is a title search?

a. an examination of public records to ensure that the seller is the legal owner of the property
b. an examination of public records to ensure that the seller does not owe money on the property
c. an examination of public records to ensure that no liens other claims are held against the property
d. all of the above

What is the purpose of having an appraisal done before purchasing a home?

a. to estimate the insurance value of the home
b. to estimate the market value of the home
c. to estimate the closing costs of the loan
d. to estimate the PMI Insurance costs of the loan

What is a commitment letter?

a. the formal loan offer by the lender stating the terms of the loan, origination fees, APR, and PITI fees
b. the formal loan offer by the lender stating insurance costs
c. the formal loan offer by the lender stating taxes and insurance costs
d. none of the above

During closing, which of the following actions must be completed before a loan is approved?

a. require a title search
b. require title insurance
c. require completed HUD-1 Settlement Statement
d. all of the above