unit 3

Question 1

the national flood insurance program is a program within

Answer 1

the federal emergency management agency (FEMA)

Question 2

to be eligible for an exclusion of capital gains income, a homeowner must have owned the residence and occupied it as a primary residence for how long before the sale or exchange?

Answer 2

at least two of five years

Question 3

variations in flood insurance rates are based on

Answer 3

decisions made by congress

Question 4

a first-time homebuyer may make a penalty-free withdrawal from an IRA of up to

Answer 4

$10,000

Question 5

one of the primary goals of the National Flood Insurance Program (NFIP) is to

Answer 5

reduce flood damage through a community’s adopting and enforcing floodplain management regulations

Question 6

a house cost $100,000 five years ago, has depreciated by $5,000, and will cost $150,000 to rebuild today. if the homeowner has a full-replacement coverage policy that meets coinsurance requirements, what would the insurance pay if the house burns completely to the ground?

Answer 6

$150,000

Question 7

if a mortgage is secured by a property itself, who will likely demand that the structure be insured?

Answer 7

regulations of the lending institution

Question 8

as the owner reduces the debt on a property, which of the following increases?

Answer 8

equity

Question 9

using conservative lending practices, a loan officer would most likely use a front-end ratio of

Answer 9

28%

Question 10

in addition to residential units, which type of property often provides shopping and recreational opportunities and, in some cases, health care facilities?

Answer 10

retirement communities

Question 11

which of the following are guaranteed to show a positive return on investment?

a. none of these
b. a detached single-family home
c. a condominium
d. a town house

Answer 11

none of these

Question 12

the percentage used in the formula for calculating a buyer’s payment on all debts, including the house payment, installment loans, and credit card debt, is called

Answer 12

the back-end ratio

Question 13

purchasing a national flood insurance policy would be optional for owners of

Answer 13

residential properties that have flooded only once, with a loss of no more than $1,000

Question 14

what is an insurance endorsement?

Answer 14

an extension of coverage

Question 15

federal flood insurance policies are available on which types of properties?

Answer 15

residential, commercial, industrial, and agricultural

Question 16

factors influencing home ownership include mortgage terms, ownership expenses, ability to pay, type of home, location, and what?

Answer 16

potential for profit
tax deductions
investment considerations

Question 17

in a time-share occupancy, the owners pay the purchase price of their individual shares plus

Answer 17

an annual maintenance fee

Question 18

is there a site on the internet is guaranteed to have a list of all the homes for sale, their current prices, and the latest information about interest rates?

Answer 18

no

Question 19

when the vast majority of homeowners sell their homes, do they end up paying large amounts of tax on their capital gains?

Answer 19

no, the vast majority of sellers to do not exceed the exclusion amount

Question 20

which type of home is composed of prefabricated components that arrive on site in units preassembled at the factory and then lifted into place with a crane?

Answer 20

modular homes

Question 21

an owner of which kind of property does not own the unit itself but owns shares of stock in the corporation that holds title to the building?

Answer 21

cooperative

Question 22

insurance companies settle property insurance claims on the basis of which of the following?

Answer 22

full-replacement coverage
actual cash value
proration according to the coinsurance clause

Question 23

mortgaged property represents an investment because it is the purchase of an asset that has potential for

Answer 23

profit

Question 24

if a tree falls on a house with homeowners insurance, who gets paid?

Answer 24

the borrower/owner of the property

Question 25

flood insurance covers damage from

Answer 25

the rise of flood waters

Question 26

determining a prospective homebuyer’s ability to pay depends on which factor?

Answer 26

payment history
number of credit cards
balances on installment loans

Question 27

if a property is flooded, which loss would a homeowner expect to be covered by flood insurance

Answer 27

damage to a detached garage

Question 28

if a loan applicant has a poor credit history, a residential loan originator would be more likely to use housing-expense and total-debt ratios of

Answer 28

28% and 36%

Question 29

are certain homeowners singled out and required to have multiple insurance policies?

Answer 29

yes, some owners along the coast or rivers may be required to have separate flood and wind damage policies from different companies

Question 30

the insurance company will pay the actual cash value of the loss or a percentage of the replacement cost if a homeowner has a coinsurance clause and coverage on the property is

Answer 30

more than the coinsurance clause percentage

Question 31

insurance companies may use which of the following in deciding whether to issue a policy and what to charge for it?

Answer 31

age of the home
credit score
condition of the home