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Personal Finance: Home & Automobile Buying Decision
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The three main similarities between mortgages and car loans are that both are: Installment loans. Types of secured loan. Have a fixed payment period

Personal Finance: Home & Automobile Buying Decision
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25 Questions

1. Another name for a closed-end lease is a(n)
2. In evaluating your financial history, lenders generally focus on which of the following?
3. One of the main barriers to home ownership is the down payment.
4. An automobile warranty provides coverage for the basic parts against manufacturer's defects for a set period of time or miles.
5. When planning your budget to determine how much your home will cost you every month, which of the following should you include in your planning?
6. Most predatory lenders offer prepayment privileges with their mortgages.
7. Which of the following is not an advantage of living in a condo?
8. Young, single people often live in rental housing, since they may not yet have the funds to purchase a home.
9. You are planning on starting your own business in 18 months and you intend to purchase a new home- You have looked carefully at your budget and have determined that you can afford a PITI of $900 per month- Your banker has told you that you can easily qualify for a PITI of $1,150 per month- Which of the following is the most reasonable explanation for this discrepancy?
10. The two most common types of two-step mortgages are the 8/22 and 12/18, in which lenders offer a lower interest rate for the first 8 or 12 years and then adjust the rate for the remaining 22 or 18 years.
11. A mortgage with a 20% down payment will have a higher APR than one with less than 20% down.
12. Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full.
13. The safest place to get a mortgage is at your bank, credit union, or savings and loan institution.
14. The monthly payments on a 36-month lease on a car will often be smaller than the monthly payments on a 36-month loan to purchase the car.
15. Subprime mortgages are illegal.
16. Special assessments are fees that can be charged to cooperative shareholders and condominium owners to cover large maintenance and repair items.
17. PITI stands for the total of your monthly
18. The initial rate on an adjustable rate mortgage (ARM) is sometimes called the teaser rate.
19. The best time to get an ARM is when the market rates of interest are high.
20. You have an option on an ARM that has a two-year adjustment interval, 4% margin, 2% periodic rate cap and a 6% lifetime cap- The current initial rate is 5.35%- You can also get a 30-year, fixed-rate mortgage for 6.65%- You plan on staying in this home for at least 10 years. What would be your best choice?
21. According to Edmunds.com, a new car's value declines by 15 to 19 percent in the first minute of ownership after you leave the lot.
22. Mortgage bankers originate mortgage loans, sell them to banks, pension funds, and insurance companies, and service or collect all the monthly mortgage payments.
23. Someone who plans on selling his or her home within the next 3 years should get a fixed -rate mortgage.
24. A down payment is the initial buyer's equity in the asset being purchased.
25. Abigail is financing her first home- She is borrowing $125,000- Her bank is loaning her the money for 15 years at an APR of 5.7%- What will Abigail's monthly mortgage payment be?

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