Chapter 3: Concepts Of Home Ownership Flashcards
What cannot exceed 28% of gross income
Mortgage payments
Principal and interest
Taxes and insurance impounds
Represents the paid off share of the property held free of any mortgage
Equity
What is not a cost or expense of owning a home
Taxes on personal property
What can homeowners not the deduct when preparing their income tax return
Mortgage interest on a third home
A building that is remodeled into residential units and is no longer used for the purpose of which it was originally built is an example of?
A converted use property
A high-rise development that includes office space, stores, theaters, an apartment units is an example of what?
Mixed use development
Each room of the house was preassembled at a factory, driven to the building site on a truck, and then lowered onto its foundation by a crane. Later, workers finish the structure and connected plumbing and wiring before the owners moved in. What type of home is this?
Modular
When married homeowners who filed jointly realize a profit from the sale of their home that exceeds $500,000 what is true
The excess gain will be taxed at the current applicable capital gains rate
Theft, smoke damage, and damage from fire are covered under which type of homeowners insurance policy?
Basic form
One result of the capital gains tax lot is that most homeowners what?
May use the $250,000 exclusion if they lived in the property for two out of the last five years
Into thousand and 11, a buyer paid to discount points at the closing. What is not to Deductible from his gross income?
The gain realized from the sale or exchange of a principal residence
A community that merges housing, recreation, and commercial units into one self-contained development is called?
PUD
What is an effort to increase homeownership?
Lower closing cost for first time homebuyers
The real cost of owning a home include certain cost/expenses that many people overlook. What is not a cost/expense of homeownership?
Personal property taxes
What is never covered in any homeowners insurance policy?
Flood
Which clause is found in most homeowners insurance policies?
Co-ownership clause
That portion of the value of an owners property value that exceeds the amount of their mortgage that is called
Equity
Requires that the owner maintain insurance equal to a specified percentage, usually 80% of the replacement cost of the dwelling
Coinsurance clause
What is the basic cost of home owning a home. PITI
Principal
Interest
Taxes
Insurance
The real estate broker’s responsibility to keep the principal informed of all the facts that could affect the transaction is the duty of?
Disclosure
Which of the following would be considered dual agency?
The sponsored licensee acting for both the buyer and the seller in the same transaction
The relationship of a broker to his or her client is that of?
Fiduciary
What is true of a duty of the real estate broker who is acting as the agent of the seller?
The broker is obligated to render faithful service to the principal
A licensee is permitted to represent both the seller and the buyer in the same transaction when?
Both parties have been informed in writing and have agreed to the dual representation
Which action would be considered lawful practice in real estate brokerage?
Exaggerated statements about the property
As an agent for the seller, a real estate broker can?
Solicit an offer to purchase the property from a prospective buyer
A seller has listed her home with the broker for $290,000 in the broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $285,000 and the seller excepts it. In this situation?
The broker has violated his agency relationship with the seller
A listing broker was told by his principal not to advertise her property and a newspaper that was out of the area. The broker complied because he?
Must obey the lawful instructions of his principal
It is the duty of an agent to disclose to the principal every step taken in the transaction of the principals business. This is because the?
Agent has fiduciary obligations to the principal
Upon discovering a latent defect in the property, the licensee should discuss the problem with the seller and then?
Inform any prospective buyers of the defect
Which phrase best to find the traditional law of agency?
The rules of law that define the responsibilities of an agent to the principal
A broker who is the agent of the buyer should do which of the following?
Advise the buyer if the listing price of the sellers house is unrealistic
In Illinois, a licensee working with a buyer sells a property listed by another brokerage firm in the MLS. The licensee has been working with the buyer for many months but does not have a written agency contact with the buyer. This licensee has created an implied agency with?
The buyer
A buyer who is shown properties listed for rent by a broker is the brokers?
Customer or client
Property manager is hired to manage your property while the owner is overseas for two years. The property manager is?
A general agent
A broker who represents the seller is showing a house to prospective buyer. The broker knows that the house occasionally has seepage in the basement. What would withholding the information prevent?
Prevents the buyer from making an informed decision
The foremost consideration in the purchase of a home is its affordability. What is the second?
The location of the property
The real cost of owning a home include certain costs expenses that many people overlook. What is not a cost expense of homeownership?
Personal property taxes
Most homeowners insurance policies contain which of the following clauses?
A coinsurance clause
The owners of the vacation homes sold it for $188,000. If they made a profit of 10%, what was the original cost of the property?
$170,900
In the event that homeowners insurance policy provides coverage for less than 80% of the full replacement cost of the dwelling, then the loss of the residence will be settled for?
Either the actual cash value are the prorated repair cost
What is the type of development that combines office space, stores, and residential units in a single community?
Mixed use development
Under the provisions of the federal income tax code, what is the maximum allowable gain that may be claimed as tax exempt by a couple filing jointly?
$500,000
A basic homeowners insurance policy does not protect against?
Earthquake and volcanoes
Federal income tax regulations allow homeowners to reduce their annual taxable income by amounts paid for?
Real estate taxes
A borrower applied for a 30 year loan instead of the 25 year loan. In this situation, what is true?
The longer-term mortgage result in lower monthly payments
Homeowner has insurance coverage that covers fire and water damage. If you wants to increase his coverage, the policy will protect against which additional risk?
Liability coverage
A married couple has been living in a condominium at the shore for the past four years in the same house that they bought 25 years ago to a tenant. If they sell their house, how much of the capital gain will be taxable?
100%
The value that an owner has a property that exceeds the amount of the mortgage that is called?
Equity
A property owner listed a property for sale at $100,000 if the owners cost was 80% of the listing price, what will be the percentage of profit when the real estate is sold for the listing price?
25 percent
The philosophy behind and exchange is that?
Income tax should not apply as long as a real estate investment remains intact
