Unit 3 Binder- Concepts of home ownership Flashcards
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 includes certain costs of expenses that many people overlook. Which of these is NOT such a cost or expense of home ownership?
A) The income lost on cash invested in the home?
B) The interest paid on borrowed capital
C) Maintenance and repair expenses
D) Personal property taxes
D) Personal property taxes
Most home owners insurance policies contain which of these clauses?
A coinsurance clause
The owners of a vacation home sold it for $188,000. If they made a profit of 10%, what was the original cost of their property?
$169,200
In the event that a homeowner’s 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 or the prorated repair cost.
Which of these types of development 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 man be claimed as tax-exempt by a couple filing jointly?
$500,000
A basic homeowners insurance policy does NOT protect against?
Earthquake and volcanic action.
Federal income tax regulations allow homeowners to reduce their annual taxable income amounts paid for
Real estate taxes
A borrower applied for a 30- year loan instead of the a 25- year loan. In this situation, which is of the following is TRUE?
A) The borrower must have at least a 25% down payment to negotiate a 30- year loan.
B) The longer term mortgage will result in lower monthly payments
C) The borrower can only secure a 30- year mortgage if the borrower is is purchasing a second home
D) The longer the term mortgage, the lower the interest rate.
B) The longer term mortgage will result in lower monthly payments.
A homeowner has insurance coverage that covers fire and water damage. If he wants to increase his coverage, the policy will cover what additional risk?
A) Hurricane
B) War or nuclear explosion
C) Liability coverage
D) Volcanic eruption
C) Liability coverage
A married couple has been living in a condominium at the shore for the past 4 years and leasing the house that they bought 25 years ago to a tenant. If they sell their house, how much capital gain will be taxable?
100%
The value that an owner has in the property that exceeds the amount of the mortgage debt is called.
Equity
A property owner listed a property for sale at 100,000. If the owner’s 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%
