Chapter 11 Test PDF

Chapter 11 Test MULTIPLE CHOICE Circle the letter next to the correct answer. o 1. It's best to develop good now instead of waiting until you're on your own to figure it all out. A. Money habits C. Real estate...

Chapter 11 Test MULTIPLE CHOICE Circle the letter next to the correct answer. o 1. It's best to develop good now instead of waiting until you're on your own to figure it all out. A. Money habits C. Real estate investments B. Diet and exercise plans D. Friendships 2. Renting is a great option for many people. A. True B. False 3. Your rent payment should total no more than % of your take-home pay. A. 50 C. 75 B. 15 D. 25 4. When you're ready to buy a house, the best option is a. A. 20-year VA loan C. 30-year equity loan B. 15-year fixed-rate conventional mortgage D. 30-year fixed rate mortgage 5. What does cost of living refer to? A. How much of your monthly income C. The level of wealth, comfort, material is budgeted specifically for your rent goods and necessities available to a group or mortgage of people B. The average cost of the basic goods and D. How wealthy or poor you are at the time of services needed to maintain a certain purchasing your first home standard of living 6. Making periodic payments to a landlord for the use of their property is called. A. Down payment C. Renting or leasing B. Buying D. Security deposit 7. You should rent until you are able to. A. Buy a home the right way C. Invest in stocks B. Become a landlord someday D. Buy amenities F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 1 O F 6 MULTIPLE CHOICE Circle the letter next to the correct answer. o 8. Buying a house while can put your at risk. A. In debt; home purchase C. Debt-free; renter's insurance B. Getting pre-approved; life D. On a budget; social life 9. Living on campus at college will help you living on your own, while living off campus will require you to. A. Dive into; live with your parents C. Get used to; cut half of your college courses B. Ease into; pay for rent, utilities, and D. Enjoy; find roommates groceries 10. Your decision to rent or buy depends on your. A. Feelings towards renting or buying C. Income tax B. Friends' opinions D. Financial situation 11. As you shop around and compare rent prices, remember that paying extra for is not worth it if it keeps you from reaching your financial goals. A. Amenities C. Tax brackets B. Mortgages D. Security deposits 12. A house is an asset that typically will value over time. A. Stay the same C. Depreciate in B. Decrease in D. Increase in 13. You should buy a home, even if you cannot afford it just yet. Renting is a waste of money. A. True B. False 14. You need to be completely out of debt, have a fully funded emergency fund, and have saved enough cash for a down payment before you. A. Buy a house C. Rent a house B. Lease a house D. Sell a house 15. The only time it's okay to borrow money if you can't pay 100% in cash is... A. Getting a car lease C. Buying a home (mortgage) B. For home improvement projects D. Renting a home F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 2 O F 6 MULTIPLE CHOICE Circle the letter next to the correct answer. o 16. A leasing contract... A. Can be terminated at any time without any C. Is something a roommate owes taxes on fees or penalties when they move in with the current renter B. Is a legal document that allows the renter D. Should be signed immediately, even before (tenant) to use the property for a period reading it of time 17. No matter what path you choose to take after high school, the money principles stay the same. What are they? A. Live on more than you make and debt C. Invest before anything else and budget if dominates all. you have time. B. Only use a debit card for purchases, rent- D. Save, budget, stay out of debt, live on less to-own loans are king, and don't open a than you make, and be generous. savings account. 18. If you look at long-term costs, is usually the better deal. A. Homeownership C. Leasing B. Renting D. Maintaining 19. It's important to read your leasing contract, because once you sign it, is enforceable by law. A. True B. False 20. What type of interest rate is locked in and won't change for the life of the loan? A. 15-year C. Equity B. Fixed-rate D. Adjustable rate 21. When someone spends so much of their income on the costs of homeownership that they struggle to reach their other financial goals, they are. A. Wealthy C. Wise homeowners B. House poor D. Rent poor 22. A fixed-rate mortgage has a mortgage rate for years. A. Set; a set number of C. 12%; 30 B. High; a large amount of D. Good; 15 F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 3 O F 6 MULTIPLE CHOICE Circle the letter next to the correct answer. o 23. What information should a lease contain? A. The names and numbers of the closest C. Acknowledgement clause, your name, and shopping malls the local restaurants available B. Property address, rental term, security D. An agreement that your rent will only be deposit terms, and pet fees paid on a credit card 24. Which type of loan is not secured by a government entity and usually has the best rate and term? A. FHA loan C. Family loan B. VA loan D. Conventional loan 25. Learning about the costs of living before you need to cover them and creating good money habits early are both examples of. A. Taking personal responsibility C. Being a consumer B. Poor money management D. Wealth building 26. What is your mortgage principal? A. The largest amount of money you are legally C. The amount borrowed (that must be repaid) allowed to borrow to purchase a home B. The down payment needed to get a D. The first payment you make on your mortgage new home 27. To make living with a roommate more peaceful while you're saving money... A. Communicate, be respectful, and be C. Avoid talking to them in order to avoid considerate conflict B. Require your roommate to pay a larger rent D. Assume that your best friend will make a check than you do great roommate 28. After you hire a real estate agent, the next step in the process is to. A. Close on your new home C. Start looking at homes within your budget B. Get a home inspection D. Make an offer on a home 29. It is impossible to get a mortgage without a credit score. A. True B. False 30. Equity is the difference between what you still owe on your home and what it is worth. A. True B. False F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 4 O F 6 SHORT ANSWER Use what you've learned in this chapter to answer these questions. o 31. What are some of the costs of living on your own? 32. What are some ways that someone can save money on their rent? 33. Explain how renting or buying a home is connected with someone's ability to be generous? 34. What are some good questions you could ask an adult to help you prepare to be financially independent someday? 35. Why is a 15-year fixed-rate mortgage better than a 30-year? F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 5 O F 6 ESSAY QUESTIONS Use what you've learned in this chapter to answer these questions. o 36. Using examples from the text, give some of the advantages and disadvantages of renting and owning a home. 37. Why is it important to do The Five Foundations in order? F O U NDA TI O NS I N PERSONAL FI NANCE | CH APTER 11 TEST PAGE 6 O F 6