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Mortgage Basics: Chapter 1 quiz

If you think you've mastered the material in this chapter, take our quiz. After you click the "submit" button, the answers will appear below.

  1. What are some of the benefits of homeownership?

    Deductibility of mortgage interest.
    Real estate is the best investment around.
    Interest paid on mortgage is usually deductible on taxes.
    A and C.
    A and B.


  2. When deciding whether to grant a loan, mortgage lenders look closely at something called the ''housing expense ratio.'' What is that?

    It is a financial ratio comparing the number of vacant homes in a neighborhood to a national vacancy average. It tells the lender whether property values are likely to rise, and therefore whether it's smart to make that loan.
    The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment.


  3. What else will you have to consider when deciding how much house you can afford?

    Property taxes.
    Insurance.
    Both.
    Neither.


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