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a USE THIS ONE 2 > Chapter 3: Concepts Of Home Ownership > Flashcards

Chapter 3: Concepts Of Home Ownership Flashcards

1
Q

What cannot exceed 28% of gross income

A

Mortgage payments

Principal and interest

Taxes and insurance impounds

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2
Q

Represents the paid off share of the property held free of any mortgage

A

Equity

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3
Q

What is not a cost or expense of owning a home

A

Taxes on personal property

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4
Q

What can homeowners not the deduct when preparing their income tax return

A

Mortgage interest on a third home

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5
Q

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

A converted use property

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6
Q

A high-rise development that includes office space, stores, theaters, an apartment units is an example of what?

A

Mixed use development

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7
Q

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?

A

Modular

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8
Q

When married homeowners who filed jointly realize a profit from the sale of their home that exceeds $500,000 what is true

A

The excess gain will be taxed at the current applicable capital gains rate

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9
Q

Theft, smoke damage, and damage from fire are covered under which type of homeowners insurance policy?

A

Basic form

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10
Q

One result of the capital gains tax lot is that most homeowners what?

A

May use the $250,000 exclusion if they lived in the property for two out of the last five years

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11
Q

Into thousand and 11, a buyer paid to discount points at the closing. What is not to Deductible from his gross income?

A

The gain realized from the sale or exchange of a principal residence

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12
Q

A community that merges housing, recreation, and commercial units into one self-contained development is called?

A

PUD

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13
Q

What is an effort to increase homeownership?

A

Lower closing cost for first time homebuyers

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14
Q

The real cost of owning a home include certain cost/expenses that many people overlook. What is not a cost/expense of homeownership?

A

Personal property taxes

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15
Q

What is never covered in any homeowners insurance policy?

A

Flood

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16
Q

Which clause is found in most homeowners insurance policies?

A

Co-ownership clause

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17
Q

That portion of the value of an owners property value that exceeds the amount of their mortgage that is called

A

Equity

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18
Q

Requires that the owner maintain insurance equal to a specified percentage, usually 80% of the replacement cost of the dwelling

A

Coinsurance clause

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19
Q

What is the basic cost of home owning a home. PITI

A

Principal

Interest

Taxes

Insurance

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20
Q

The real estate broker’s responsibility to keep the principal informed of all the facts that could affect the transaction is the duty of?

A

Disclosure

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21
Q

Which of the following would be considered dual agency?

A

The sponsored licensee acting for both the buyer and the seller in the same transaction

22
Q

The relationship of a broker to his or her client is that of?

A

Fiduciary

23
Q

What is true of a duty of the real estate broker who is acting as the agent of the seller?

A

The broker is obligated to render faithful service to the principal

24
Q

A licensee is permitted to represent both the seller and the buyer in the same transaction when?

A

Both parties have been informed in writing and have agreed to the dual representation

25
Q

Which action would be considered lawful practice in real estate brokerage?

A

Exaggerated statements about the property

26
Q

As an agent for the seller, a real estate broker can?

A

Solicit an offer to purchase the property from a prospective buyer

27
Q

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?

A

The broker has violated his agency relationship with the seller

28
Q

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?

A

Must obey the lawful instructions of his principal

29
Q

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?

A

Agent has fiduciary obligations to the principal

30
Q

Upon discovering a latent defect in the property, the licensee should discuss the problem with the seller and then?

A

Inform any prospective buyers of the defect

31
Q

Which phrase best to find the traditional law of agency?

A

The rules of law that define the responsibilities of an agent to the principal

32
Q

A broker who is the agent of the buyer should do which of the following?

A

Advise the buyer if the listing price of the sellers house is unrealistic

33
Q

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?

A

The buyer

34
Q

A buyer who is shown properties listed for rent by a broker is the brokers?

A

Customer or client

35
Q

Property manager is hired to manage your property while the owner is overseas for two years. The property manager is?

A

A general agent

36
Q

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?

A

Prevents the buyer from making an informed decision

37
Q

The foremost consideration in the purchase of a home is its affordability. What is the second?

A

The location of the property

38
Q

The real cost of owning a home include certain costs expenses that many people overlook. What is not a cost expense of homeownership?

A

Personal property taxes

39
Q

Most homeowners insurance policies contain which of the following clauses?

A

A coinsurance clause

40
Q

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?

A

$170,900

41
Q

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?

A

Either the actual cash value are the prorated repair cost

42
Q

What is the type of development that combines office space, stores, and residential units in a single community?

A

Mixed use development

43
Q

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?

A

$500,000

44
Q

A basic homeowners insurance policy does not protect against?

A

Earthquake and volcanoes

45
Q

Federal income tax regulations allow homeowners to reduce their annual taxable income by amounts paid for?

A

Real estate taxes

46
Q

A borrower applied for a 30 year loan instead of the 25 year loan. In this situation, what is true?

A

The longer-term mortgage result in lower monthly payments

47
Q

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?

A

Liability coverage

48
Q

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?

A

100%

49
Q

The value that an owner has a property that exceeds the amount of the mortgage that is called?

A

Equity

50
Q

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?

A

25 percent

51
Q

The philosophy behind and exchange is that?

A

Income tax should not apply as long as a real estate investment remains intact

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