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15. Klaus is about to get a mortgage to buy a home. He has the option of getting an adjustable rate mortgage or a fixed rate mortgage. He wants to have lower housing costs upfront so he can have some money to buy furniture. He also expects 3% salary increase each year over the next few years. Which type of mortgage might work best for him and why? _ ____________________________________________________________________ _ ____________________________________________________________________ _ ____________________________________________________________________ 16. Raul has a choice: He can rent an apartment for $600 a month or buy a home of similar quality in the same neighborhood. Buying the home requires a 20% down payment of $25,000 and his monthly mortgage payments would be $750. If he rents, how much will he save? What must he do with those savings to potentially build as much wealth as he would if he had bought the home? _ ____________________________________________________________________ _ ____________________________________________________________________ 17. Which of the following is NOT a step in the purchase of a home? a. title inspection c. escrow and transfer of title b. mortgage application d. lease signing 18. T F Relax! If you are living in a rented apartment and your belongings are destroyed by fire or theft, the landlord’s insurance will cover the cost of replacement. 19. Lydia’s landlord sent her a letter telling her that she has to move out in 30 days because he wants to move his aging father into the house to be closer to him. Lydia is angry because she’s only been living in the house for six months and she’s been a really good tenant! She is on a month-to-month lease. Does she have any recourse? Explain your answer. _ ____________________________________________________________________ _ ____________________________________________________________________ 20. Faisal wants to rent a new apartment. The rent is $700 per month. Faisal has set aside $700 and is ready to move in. Is this the full amount of his monthly housing cost? If not, what else will he have to pay? _ ____________________________________________________________________ _ ____________________________________________________________________ _ ____________________________________________________________________ PRODUCT PREVIEW
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Chapter 9 | Home is Where the Mortgage or Lease Is 174
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