Home Buying Part 1 1 A disadvantage of buying a home is o Upfront costs o Ongoing costs o Tied costs o Possible drop in values o Amenities o Maintenance and improvements 2 The module recommended using a renting vs buying calculator on o Realtor com 3 A great question to ask yourself when looking into buying a home is o Will i live in this house for at least 5 years o Do i have a stable job o Will i have the financial support of another person o Does the future of the local house market look positive o Will i have a family in the near future o Will i get enough return for my investment o Do i know enough about what i am getting into 4 Lenders would prefer for home buyers to make a down payment of of the home s price o 20 5 With an 80 15 5 Piggy Back Loan 15 represents a o Secondary Mortgage of 15 primary secondary down 6 FHA Loans require a credit score of 700 or better for approval o False only require 580 or higher 7 Private Mortgage insurance is a benefit that protects home buyers from natural disasters o False 8 Terms o Points Pay 1 of the mortgage upfront to reduce the interest rate o Appraisal Fee Paid to value the home to substantiate the mortgage amount o Origination fee Charged fo the lender to review and finalize the mortgage o Notary Fee Paid to have the transfer of home title witnessed by a professional 9 The p in PITI stands for o Principal Principal Mortgage principal paid each month bankrate com Interest Mortgage interest paid each month bankrate com Taxes Property taxes 2 24 of the home value Insurance Home insurance 3 875 per year 10 Losses covered by a standard Homeowners insurance policy o Fire and lightning o Sudden and accidental damage by smoke o Explosion o Theft o Vandalism and malicious mischief o Riot and civil commotion o Aircraft and vehicles o Windstorm hurricane and hail o Sudden and accidental water damage a home buyer s monthly gross income o 36 11 A mortgage may not be approved if PITI other large debts represents more than of Home Buying Part 2 1 Monthly payment amounts can fluncuate for a fixed rate mortgage o False Fixed rate mortgage 2 Monthly payment amounts can fluctuate for a Adjustable Rate Mortgage o True 1 Rate doesn t change 2 Payment amounts don t change 3 Allows for budgeting 4 Safest choice for most people Adjustable Rate Mortgage 1 Low initial teaser rate 2 Adjusts frequently afterwards 3 Complex rules and fees 3 The Payment Cap for an Adjustable Rate Mortgage is the maximum the interest rate can increase each adjustment period Payment max payment amount at any time 4 The Lifetime Cap for an adjustable rate mortgage is the maximum the interest rae can increase during the life of the loan Max interest rate can increase over the life of the loan 5 The Periodic Cap for an adjustable rate mortgage is the maximum the interest rate can increase during the life of the loan Max interest rate can increase each adjustment period 6 The all time high for 30 year Fixed Rate Mortgage occurred in 1981 and was around o False o True o False o 18 7 A written agreement guaranteeing a home buyer a specific interest rate on a home loan provided that the loan is closed within a certain period of time ex 15 days is a called a o Lock In Agreement 8 15 year mortgage o Higher payments o Lower rates o Lower total interest 9 30 year mortgage o Foreclosure is less likely o Extra money can be invested 10 The example covered in the lecture recommended taking out a mortgage and paying it off in years 11 The lecture recommended that you consider when determining the location of your new home o 30 15 o Safe and friendly community o Quality schools o Proximity to frequented places o Traffic noise 12 The lecture recommended that you call to ask about the safety of the neighborhoof before buying a home in it 13 The lecture recommended that you consider all except for when determining the type of home you will buy o What type of grass will the yard be made of 14 On average real estate agents are paid up to the max of the sales price of the home 15 Another name for the sellers Real Estate Agent is the listing agent o The police o 7 o True 16 What is the first step of the home buying process o Make an offer 17 What is the last step of the home bying process o Celebrate Investments o True value except except 1 Investing is how you make your mon ey grow or appreciate for long term financial goals 2 How many years will it take for 10 000 invested and earning 7 annually to double in o About 10 years 72 7 3 According to the lecture investments provide return in the form of all the below o Annuitized debt consolidation 4 Considerations when opening a Brokerage Account included all of the following 5 The lecture mentioned all of the following as investable Real Assets or FInancial Assers 6 Reasons for investinf in financial assets over real assets include all of the following o Required minimum distributions Account fees Minimum deposit balance requirements Account type except o Cryptocurrency Real estate Collectibles Index funds except o They are overall better long term assets Can be done quickly Can be passively managed No low transaction costs 7 Semi annual payments on a 10 year 2 000 Face Value Bond earning 15 should 8 According to the module bond type can differ based upon all of the following except be o 10 o Dividend type Rating Coupon Issuer security o false o True 9 Systematic Risk is diversifiable or controllable It is the risk specific to an individual 10 Systematic risk is always present or inherent It is the risk all securities are subject to 11 All investment risk can be diversified away 12 Diversification is a type of RIsk Management 13 Unsystematic risk is always present or inherent It is the risk all securities are subject to 14 Unsystematic risk is diversifiable or controllable It is the risk specific to an individual o False o True o False security o True 15 states that the goal of diversifying your investments and correlation is to optimize your portfolio to get the best return for a given amount of risk o The Efficient Frontier Risk Management o False 1 Risk management s sole purpose is to protect your wealth How to protect your wealth and mental well being 2 According to the lecture all but were used as an example of unexpected events 3 All but were commonly used types of insurance covered during the lecture which can 4 For insurance provides financial coverage for the losses of the that they may which could destroy your accumulated wealth o Government