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LET’S PRACTICE
Name: _____________________________________________________________________________
Are You Financially Literate? Chapter 9 Quiz 1. Five years ago Ryan purchased a home. His home loan is an ARM. For five years his mortgage payment has been $500 per month. This year his payment increased to $515. What does ARM stand for and why did Ryan’s payment increase? What is another name of an ARM? _ ____________________________________________________________________ _ ____________________________________________________________________ 2. Which of the following is the collateral for a home loan? a. the home c. a portfolio of bonds b. a college degree d. a commercial building 3. Nadjia bought her home several years ago. She made a down payment of 20% of the purchase price and paid the rest through a home loan of $240,000. Through amortization the principal balance on her loan is now $205,000. Her home is currently worth $320,000. How much equity does Nadija have in her home? _ ____________________________________________________________________ How much equity does Najida have if her home value also appreciated by 5%? _ ____________________________________________________________________ 4. When a borrower defaults on their mortgage, the bank can: a. keep their security deposit c. bring an unlawful detainer action b. foreclose and takeover ownership to the property d. have them arrested 5. Alain is excited to be buying a home. His lender told him the $120,000 loan he is applying for “costs 2 points .” What are “points” and how much will he have to pay? _ ____________________________________________________________________ _ ____________________________________________________________________ 6. Which of the following is something you can do to cause the value of your home to appreciate? a. build “sweat equity” by making improvements b. pay off your mortgage c. get your roommate to help make mortgage payments d. encumber your title 7. Which of the following is NOT a component of the title report? a. tax and other liens c. encroachments b. local school district scores d. utility and other easements PRODUCT PREVIEW
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Chapter 9 | Home is Where the Mortgage or Lease Is 172
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