19.4 real estate investments

Question 1

What are 4 costs of home ownership?

Answer 1

1. property taxes
2. interest payments
3. property insurance
4. maintenance

Question 2

What factors are taken into consideration when doing an appraisal?

Answer 2

• the quality of construction
• the location
• the price of similar houses in the area

Question 3

What are property taxes?

Answer 3

• taxes paid on assessed value of property
• vary greatly from state to state
• normally range from 2-4% of the market value of the property

Question 4

land and anything that is attached to it

Answer 4

real estate

Question 5

the difference between the price at which you could currently sell your house and the amount owed on the mortgage

Answer 5

equity

Question 6

a legal document giving the lender a claim against the property if the principal, interest, or both are not paid as agreed

Answer 6

mortgage

Question 7

What are pros and cons of owning a mobile home?

Answer 7

Pros:

• having a place to call your own

Cons:

• not much land
• small in size

Question 8

interest payments ____ to the cost of the house

Answer 8

interest payments add to the cost of the house

Question 9

a common financial benefit of home ownership is:

• low property insurance costs
• tax deduction for your down payment
• increased property value
• low maintenance costs

Answer 9

increased property value

Question 10

person that is trained and licensed to help with the buying and selling of real estate

Answer 10

real estate agents

Question 11

an individually owned houseing unit in an apartment like complex, the maintenance and yard work are normally taken care of with a service fee paid by owners

Answer 11

condominiums

aka condos

Question 12

What are the advantages of home ownership?

Answer 12

• tax benefits
• increased equity (will make money when you sell house)
• pride of ownership

Question 13

Real estate property taxes are ____ when computing your federal income taxes

Answer 13

real estate property taxes are deductible when computing your federal income taxes

Question 14

The cost of ___ - maintaining your property in good condition - is important in home ownership

Answer 14

the cost of upkeep - maintaining your property in good condition - is important in home ownership

Question 15

mortgage with an interest rate that is set for the term of the loan

Answer 15

fixed rate mortgage

Question 16

mortgage with an interest rate that is raised or lowered from time to time depending upon the current interest rate being charged by lenders

Answer 16

adjustable rate mortgage

Question 17

what does a real estate agent do?

Answer 17

• helps a person decide what they want in a house
• arranges for the prospective buyer to view homes that are for sale
• sellers of real estate also use real estate agents to help set the selling price and to promote that the house is for sale

Question 18

Describe a mortgage.

Answer 18

• long term loans - 15, 20 or 30 years term
• require monthly payments
• payments usually higher than rent
• payment includes a portion of the principal and interest charges, also includes money to be used to pay property taxes and insurance

Question 19

a ____ assures that your property has no claims against it such as back taxes.

Answer 19

a lawyer assures that your property has no claims against it such as back taxes.

lawyer helps you avoid legal problems

Question 20

What are the main benefits of home ownership?

Answer 20

• tax benefits
• increased equity
• pride of ownership

Question 21

What are pros and cons of renting an apartment or house?

Answer 21

Pros:

• you are free from most of the work and expense of property maintenence
• easy to move whenever you want or need

Cons:

• can’t call the place your own
• you need to take good care of the place but can’t fix it up the way you want it

Question 22

What real estate professionals will you need when purchasing real estate?

Answer 22

• real estate agent
• lawyer
• appraiser

Question 23

If you have a home with a market value of $180,000 and an assessed value of $90,000. If the tax rate is $60 per $1000 of assessed value, what are the annual taxes?

Answer 23

don’t need the $180,000 market value - extra info

$90,000/$1000 x $60 = $5400

Question 24

provides protection from fire, theft, accident or other losses of your home or property

Answer 24

property insurance

Question 25

someone trained to estimate the value of property and who can give an official report on the value

Answer 25

appraiser

Question 26

What are some factors that affect the value of a home?

Answer 26

• location
• quality of schools
• maintenance of the property
• home features - updated kitchen, remodeled bathrooms, master bedroom suite, finished basement, large garage, etc

Question 27

what is one investment that many people eventually acquire?

Answer 27

real estate

Question 28

the person who reports on the value of a home is an:

• lawyer
• real estate agent
• appraiser
• mortgage broker

Answer 28

appraiser

Question 29

the amount that your local government determines your property to be worth for tax purposes, normally lower than the market value

Answer 29

assessed value

Question 30

a general increase in the value of property that occurs over times, homes increase in value

Answer 30

appreciation