Home Buying Basics
What is the first step in buying a home?
A) Making a down payment
B) Getting pre-approved for a mortgage
C) Making an offer
D) Hiring a home inspector
B) Getting pre-approved for a mortgage
What is the typical length of a mortgage loan?
A) 5 years
B) 30 years
C) 50 years
D) 100 years
Answer: B) 30 years
Which of the following is NOT a one-time cost when buying a home?
A) Down payment
B) Closing costs
C) Property taxes
D) Home inspection fee
Answer: C) Property taxes
Which of the following affects your ability to get a mortgage the MOST?
A) Your car ownership
B) Your credit score
C) Your social media presence
D) Your grocery bill
Answer: B) Your credit score
What does "equity" in a home mean?
A) The amount of money paid in property taxes
B) The value of the home minus what is still owed on the mortgage
C) The total amount borrowed from the bank
D) The interest paid over time
Answer: B) The value of the home minus what is still owed on the mortgage
Which of the following is typically required when purchasing a home?
A) A rental history
B) A down payment
C) A credit card
D) A home warranty
B) A down payment
Which of the following is NOT a common type of mortgage?
A) Fixed-rate mortgage
B) Adjustable-rate mortgage
C) Balloon mortgage
D) Rent-to-own mortgage
Answer: D) Rent-to-own mortgage
What is included in closing costs?
A) Loan processing fees
B) Homeowner’s insurance
C) Title search fees
D) All of the above
Answer: D) All of the above
What is a down payment?
A) Money paid upfront toward the cost of a home
B) The total amount borrowed from the bank
C) The monthly mortgage payment
D) The cost of home repairs
Answer: A) Money paid upfront toward the cost of a home
What is a home appraisal?
A) An estimate of a home’s value
B) A home inspection for repairs
C) A type of loan
D) A way to lower taxes
Answer: A) An estimate of a home’s value
Which type of home is usually the most affordable for first-time buyers?
A) A newly built home
B) An older home in need of some updating
C) A mansion
D) A condo in a luxury complex
Answer: B) An older home in need of some updating
What happens if you fail to make mortgage payments for an extended period?
A) You receive a fine
B) Your interest rate increases
C) The bank forecloses on your home
D) You get a lower credit score but keep the home
Answer: C) The bank forecloses on your home
Which of these is an ongoing cost of homeownership?
A) Earnest money deposit
B) Real estate agent commission
C) Mortgage insurance
D) Home staging fees
Answer: C) Mortgage insurance
What percentage of your income should typically go toward housing costs?
A) 10%
B) 33%
C) 50%
D) 75%
Answer: B) 33%
Which of the following is a legal contract between a buyer and seller?
A) Lease agreement
B) Purchase agreement
C) Home inspection report
D) Credit report
Answer: B) Purchase agreement
What is one major advantage of owning a home instead of renting?
A) Less Maintenance
B) Easy to relocate if you want to move
C) You build equity over time.
Answer: C) You build equity over time.
What does it mean to "refinance" a mortgage?
A) When you pay off your mortgage
B) Your interest rate increases
C) Getting a new loan to replace the old one
D) You repay some of the money you owe in a lump sum
Answer: C) Getting a new loan to replace the old one
What is an escrow account used for in homeownership?
A) A home repair savings account
B) Account for property taxes and insurance, which the lender pays on the homeowner’s behalf
C)An account that helps you save for a down payment
D) All of the above
Answer: B) Account for property taxes and insurance, which the lender pays on the homeowner’s behalf
How can a person improve their credit score before buying a home?
A) By saving money for a down payment
B) By spending small amounts of money on several credit cards
C) By paying bills on time
D) By paying in cash for minor purchases
Answer: C) By paying bills on time
Which of the following is a key responsibility of a real estate agent?
A) Approving the buyer's mortgage loan
B) Conducting the home inspection
C) Negotiating the price and terms of the sale on behalf of the client
D) Setting property tax rates
Answer: C) Negotiating the price and terms of the sale on behalf of the client
What does it mean when a home is listed as "contingent"?
A) The seller has accepted an offer, but certain conditions must be met before the sale is final.
B) The seller has rejected all offers.
C) The home is in an HOA.
D) The home is available for rent only.
Answer: A) The seller has accepted an offer, but certain conditions must be met before the sale is final.
What is an interest rate in relation to a mortgage?
Answer: It is the percentage of the loan amount that the lender charges for borrowing the money.
Why do homes need regular maintenance?
Answer: To prevent costly repairs and keep the home in good condition.
Why is it important to have an emergency fund when owning a home?
Answer: To cover unexpected repairs and expenses.
What is the purpose of a home inspection?
Answer: To check for issues with the home before buying it.