Unit 3 - Concepts of Home Ownership

Question 1

Equity

Answer 1

The interest or value that an owner has in property over and above any indebtedness.

Question 2

PITI

Answer 2

Acronym for
-principle
-interest
-taxes
-insurance

expenses that comprise an owner’s monthly payment.

Question 3

Homeowners Insurance Policy

Answer 3

A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.

Question 4

Coinsurance Clause

Answer 4

A clause in insurance policies covering real property requiring that the policyholder maintain fire insurance coverage generally equal to at least 80% of the property’s actual replacement cost.

Question 5

Replacement Cost

Answer 5

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.

Question 6

Liability Coverage

Answer 6

Insurance that covers injuries or losses sustained within the home.

Question 7

Boot

Answer 7

Non - like kind property received in an exchange.

Usually Boot is the form of cash, an installment note, debt relief, or personal property and is valued to be the “fair market value” of the non-like-kind property received.

Question 8

Capital Gains

Answer 8

The difference between two prices is your capital gain and it’s subject to tax. You only pay capital gains tax after you sell an asset.