Finance Chapter 13 Buying a Home Flashcards
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Questions and Answers

What is a loan to purchase real estate called?

mortgage

What is a rejection of an original offer with a listing of what terms would be acceptable called?

counteroffer

What are the expenses incurred in transferring ownership from buyer to seller in a real estate transaction?

closing costs

What is the real estate marketing service in which agents pool their home listings and agree to share commissions?

<p>MLS</p> Signup and view all the answers

What is a formal document that expresses interest in entering into a real estate contract called?

<p>earnest money offer</p> Signup and view all the answers

What is the value given by a real estate appraiser called?

<p>appraised value</p> Signup and view all the answers

What value is used for computing property taxes owed against a home?

<p>assessed value</p> Signup and view all the answers

What type of loan is a mortgage agreement offered through a commercial bank or mortgage broker without government backing?

<p>conventional loan</p> Signup and view all the answers

What is the process of searching public records to check for ownership and claims to a piece of property?

<p>title search</p> Signup and view all the answers

What are conditions that limit a buyer's liability in case one or more of them are not met?

<p>contingencies</p> Signup and view all the answers

What do real estate agents earn for their work, which is a percentage of the home sale price?

<p>commission income</p> Signup and view all the answers

What type of mortgage has an interest rate that does not change during the term of the loan?

<p>fixed rate mortgage</p> Signup and view all the answers

What is the highest price that a property will bring to the market called?

<p>market value</p> Signup and view all the answers

What is the formal agreement to the terms of the buyer's offer called?

<p>seller's acceptance</p> Signup and view all the answers

What is a financial claim against property called?

<p>lien</p> Signup and view all the answers

What protects the buyer from any claims arising from a defective title?

<p>title insurance</p> Signup and view all the answers

What type of mortgage has an interest rate that changes in response to the movement of interest rates in the economy?

<p>adjustable rate mortgage</p> Signup and view all the answers

What is the legal document that transfers ownership of real property?

<p>deed</p> Signup and view all the answers

The interest you pay on your home loan, along with the property taxes, are deductible.

<p>True</p> Signup and view all the answers

Renting or owning real estate is a type of tax shelter.

<p>False</p> Signup and view all the answers

The most common source of down payment money is a bank.

<p>False</p> Signup and view all the answers

Each loan payment you make decreases your debt and increases your equity.

<p>True</p> Signup and view all the answers

A lien is a right or privilege one person has to use the land of another person.

<p>False</p> Signup and view all the answers

The multiple listing service gives people wanting to buy a home greater exposure to available homes.

<p>True</p> Signup and view all the answers

When a seller accepts an offer exactly as stated, this is called a counter offer.

<p>False</p> Signup and view all the answers

The seller pays the real estate agent's commission.

<p>True</p> Signup and view all the answers

Most lenders require that the borrower buy title insurance.

<p>True</p> Signup and view all the answers

If you and the seller have agreed on the transaction, the house will be taken off the market until the deal is completed.

<p>True</p> Signup and view all the answers

What is a legal document that establishes ownership?

<p>title</p> Signup and view all the answers

What financial advantages does home ownership offer?

<p>financial advantages, quality of life advantages, tax savings</p> Signup and view all the answers

How is the cost of homeownership lowered?

<p>tax deductions</p> Signup and view all the answers

What percentage do real estate agents typically earn from a home sale price?

<p>6 and 8</p> Signup and view all the answers

What does earnest money protect?

<p>seller</p> Signup and view all the answers

What will be checked when you apply for a mortgage?

<p>your references, your credit history, your income</p> Signup and view all the answers

What must a borrower do to qualify for a conventional loan to purchase a home?

<p>have a good credit score</p> Signup and view all the answers

What must you do to finance your purchase of a house?

<p>have funds for the down payment, meet certain lending requirements, select the type of mortgage you want</p> Signup and view all the answers

Study Notes

Key Concepts in Home Buying

  • A mortgage is a loan specifically used to purchase real estate.
  • A counteroffer is a rejection of an original offer, listing the acceptable terms.
  • Closing costs are expenses involved in transferring ownership from the buyer to the seller.
  • The Multiple Listing Service (MLS) is a marketing platform where agents share listings and commission agreements.
  • An earnest money offer is a formal document indicating interest in a real estate contract.
  • The appraised value represents the worth determined by a real estate appraiser.
  • The assessed value is used to calculate property taxes owed on a home.
  • A conventional loan lacks government backing and is offered through banks or mortgage brokers.
  • A title search involves reviewing public records to verify ownership and claims on a property.
  • Contingencies are conditions that limit a buyer's liability if unmet.

Financial Considerations

  • Real estate agents earn commission income, typically a percentage of the sale price, commonly between 6% and 8%.
  • A fixed-rate mortgage maintains a constant interest rate throughout the loan's term.
  • The market value of a home indicates the highest price it can command in the marketplace.
  • A seller’s acceptance is the formal agreement to the buyer's offer.
  • A lien is a financial claim against property.
  • Title insurance safeguards the buyer from claims due to defective titles.
  • An adjustable-rate mortgage has an interest rate that adjusts with economic conditions.
  • A deed is the legal document that transfers ownership of real property.

Truth Statements and Myths

  • Interest on home loans and property taxes are tax-deductible.
  • Renting or owning real estate does not qualify as a tax shelter.
  • The most common source of down payment is not a bank.
  • Each mortgage payment reduces debt and increases equity.
  • A lien is not a right to use someone else's land.
  • The MLS enhances home buyers' exposure to available listings.
  • A seller accepting an offer as stated is not a counteroffer.
  • The seller is responsible for paying the real estate agent’s commission.
  • Lenders typically require buyers to obtain title insurance.
  • Once an agreement is reached, the property is taken off the market until the deal finalizes.

Ownership and Financial Benefits

  • Title establishes ownership of a property.
  • Homeownership offers financial advantages, quality of life benefits, and tax savings.
  • Tax deductions can lower the cost of homeownership.
  • Earnest money serves to protect the seller during negotiations.

Mortgage Application Process

  • Mortgage applications require checking references, credit history, and income.
  • To qualify for a conventional loan, a borrower must have a good credit score.
  • Financing a home purchase involves having funds for the down payment, meeting lending requirements, and selecting a mortgage type.

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Description

Test your knowledge on key terms related to buying a home with these flashcards from Finance Chapter 13. Learn essential definitions such as mortgage, counteroffer, and closing costs to enhance your understanding of real estate transactions.

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