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Are you ready for a mortgage?

Quiz

A home is the biggest financial investment most of us make. The more you know about how to buy one, the more you’ll save. Take this quiz to see if you are ready to get out there and shop!

  1. True or false: Buying a home is the best investment one can make.

    True
    False
  2. What are the components of a typical mortgage payment?

    Property taxes, Investment, Theft insurance
    Principal, Interest, Taxes, Property insurance
    Principal, Investment, Taxes, Property insurance
    Private mortgage insurance, Interest, Theft insurance
  3. Joe and Jill each buy a house, and each take out a $100,000 loan. Joe takes out a conventional 30-year fixed rate mortgage, Jane opts for a conventional 15-year mortgage. Which of the following correctly summarizes how Joe's mortgage is different than Jane's?

    Joe's 30-year mortgage has a higher interest rate, lower monthly payments and higher overall interest payments. It builds equity more slowly than Jane's mortgage.
    Jane's 15-year mortgage has a higher interest rate, higher monthly payments and higher overall interest payments. It builds equity more slowly than Joe's mortgage.
    Joe's 30-year mortgage has a lower interest rate, lower monthly payments and lower overall interest payments. It builds equity more quickly than Jane's mortgage.
  4. Which of the following is NOT true about choosing your lender?

    Mortgage bankers usually present you with only one program.
    Mortgage brokers shop the rates -- working with more than one lender.
    Banks and thrifts generally offer fewer choices of loan products.
  5. Which of the criteria listed below has no bearing on whether a person is qualified to get a mortgage on a property.

    Employment and income
    Debt-to-income ratio
    Cash reserves and assets
    Education level
  6. True or False: Mortgage shoppers who get pre-approved rather than pre-qualified have the negotiating advantage when bidding on the house of their dreams.

    True
    False
  7. What's the main difference between a property's appraised value and assessed value?

    Nothing, appraised value and assessed value mean the same thing.
    The appraised value will determine how much a lender is willing to lend you, while the assessed value determines your property taxes.
    Appraised value is the value returned by the county property appraiser's office, while the assessed value is the fair market value determined by your property appraiser.
  8. Which of the following best describes what a home inspector does?

    Evaluates the structural and mechanical condition of the property, including the roof, heating, plumbing, and electrical and air conditioning systems.
    Repairs any damage to the property prior to closing.
    Determines the assessed value of the property.
  9. True or false: Borrowers with long-term, fixed-rate loans will always pay the same loan amount each year.

    True
    False
  10. Which of the following best describes the advantage of an informal biweekly prepayment schedule set up by the borrower over a formal biweekly prepayment plan managed by a lender?

    You pay down the loan quicker with an informal plan.
    The formal plan is more structured so that if an unforeseen financial problem arises, you are still responsible for the biweekly payment, whereas with an unstructured plan, you have more flexibility.
  11. Which of the following would help you to meet the 80 percent loan-to-value test and remove PMI from your mortgage payments?

    Excellent payment history and extra payments towards principal.
    Renovation of your home.
    Getting a competitive market analysis of your home’s value.
    Refinancing your home with a different lender.
    All of the above

-- Posted: Aug. 6, 2002

 

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