chap 10 practice Name: Class: Date: Short Answer

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1 Name: Class: Date: chap 10 practice Short Answer 1. After months of searching, Roberto Anaya and his wife find the perfect home and agree on a selling price of $156,900. What is the amount of their mortgage loan if the down payment is 1 of the selling price? Terrance Jacobs is looking for a larger home. Jacobs offers $205,000 for a four-bedroom house and the seller accepts. Jacobs wishes to make a 15 percent down payment and finance the remaining amount through the mortgage company. What is the amount of his mortgage loan? 3. Chantrell Chappelle and her husband agreed to purchase a new home for $127,900. They agree to a down payment of 25 percent. What is the amount of the mortgage loan needed to finance the purchase? 4. Tyrone Crummell purchases a house for $95,190. Financing on the house requires a $20,000 down payment. What is the amount of the mortgage loan? 5. Shante Carver and his wife obtained a 20-year, 11.5 percent loan from Federal Mortgage Associates. Using the portion of their repayment schedule, shown below, find the amounts for A, B, and C. Payment # Monthly Payment Interest Principal New Balance 221 $ $70.78 $ $7, $ A B C 6. Warisia Biggs and her husband own a farm having a market value of $276,000. The rate of assessment in the locality is 67 percent. What is the assessed value of their farm? 7. For Orlando Barnett and his wife, the rate of assessment in Foster, Rhode Island is 50 percent. The tax rate is mills. What is the real estate tax on a piece of property that has a market value of $176,430? 8. Lincoln Hurston and his brother share a home with a replacement value of $376,800. They have insured it for 100 percent of its replacement value with Scottie Insurance Company. Use the chart below to determine the amount of coverage for their garage and other structures. Scottie Insurance Company Percent of Garage and other structures 5% Personal property 50% Loss of use 15% Personal liability 40% Medical payments 1% 1

Jacobs offers $205,000 for a four-bedroom house and the seller accepts. Jacobs wishes to make a 15 percent down payment and finance the remaining amount through the mortgage company.

2 Name: Figure Use this table with the question(s) below, as needed. Homeowners Insurance Premiums Annual Premiums for a Typical Homeowners Policy Fire Protection Class Insurance Brick / Masonry Veneer Wood Frame $40,000 $166 $170 $225 $237 $270 $178 $183 $237 $248 $285 $45, $50, $60, $70, $80, $90, $100, $120, $150, $200, , ,070 $250, ,021 1, ,021 1,086 1,243 $300, ,147 1,218 1, ,218 1,295 1,483 $400,000 1,021 1,045 1,331 1,413 1,617 1,067 1,105 1,413 1,504 1,723 $500,000 1,309 1,340 1,707 1,812 2,074 1,385 1,418 1,812 1,929 2, Use Figure The replacement value of Arlene Dowden s home is $500,000. She has insured her home for 80 percent of its replacement value. The home is of brick construction and is rated in fire protection class 11. What is the annual premium? 10. Use Figure Darrell Frazier owns a home that has a replacement value of $87,500. He purchased a homeowner s policy for 80 percent of the house s replacement value. The home is of brick construction and is rated in fire protection class 3. What is his annual insurance premium? 11. Use Figure Divan Drake and her family own a home with a replacement value of $150,000. They purchased a homeowner s policy for 80 percent of the house s replacement value. The home is of wood-frame construction and is rated in fire protection class 10. What is their annual insurance premium? 12. If Darol Drew s monthly net pay is $6,320, what is the maximum housing cost he can incur without exceeding FHA guidelines of 35 percent of net pay? 13. Gela Frederick is a first-time homeowner. Her monthly net pay is $3,000. She estimates the following monthly housing expenses: $ for her mortgage payment, $24.35 for her insurance premium, $85.75 for real estate taxes, $64.74 for electricity, $32.90 for telephone service, and $18.10 for water. What is the total amount of her monthly housing costs? Is this amount within FHA guidelines of 35 percent of net pay? 14. Chiko Snow s monthly net pay is $9,610. What is the maximum housing cost he can incur without exceeding FHA guidelines of 35 percent of net pay? 15. Chu-Ya Chin recorded her housing expenses for the month of May, including the following: $ for her mortgage payment, $25.25 for her insurance premium, $ for real estate taxes, $42.67 for electricity, $47.90 for telephone, $13.42 for water, and $75.00 for garage door repair. Her monthly take-home pay is $2,835. What is her total monthly cost? Is it within FHA guidelines of 35 percent of net pay? 2

$237 $270 $178 $183 $237 $248 $285 $45,000 173 178 233 244 280 187 191 248 260 298 $50,000 178 183 241 254 290 190 195 254 265 304 $60,000 191 196 259 273 313 205 211 273 287 328 $70,000 213 216 285

3 Name: 16. The Epstein family recently purchased a home that has a replacement value of $624,000. They insured the home for 95 percent of its replacement value. What is the amount of insurance on their home? 17. The replacement value of Robert and Nancy Lawrence s home is estimated at $146,900. They have insured the house for 80 percent of its replacement value. Use the chart below to determine the amount of insurance coverage on their personal property. Anderson Insurance Company Percent of Home 80% Garage/structures 10% Loss of use 20% Personal liability 50% Personal property 60% Medical payments 1% Critical Thinking 18. Yee Hong is buying a home by making a down payment and financing the remaining portion of the selling price with a mortgage loan. What is the equation Hong will use to determine the mortgage loan amount? 19. Name three kinds of fees that can be included in closing costs. 20. Most mortgages are repaid in equal monthly payments. What two amounts are included in each payment? 3

They have insured the house for 80 percent of its replacement value. Use the chart below to determine the amount of insurance coverage on their personal property.

4 chap 10 practice Answer Section SHORT ANSWER 1. ANS: $141, ANS: $174, ANS: $95, ANS: $75, ANS: A. $67.78 B. $ C. $6, DIF: Average REF: Section ANS: $184,920 DIF: Average REF: Section ANS: $3, DIF: Average REF: Section ANS: $18, ANS: $1, ANS: $213 1

5 11. ANS: $ ANS: $2, ANS: $1, No, it is not within FHA guidelines. 14. ANS: $3, ANS: $ Yes, it is within FHA recommendations. 16. ANS: $592, ANS: $70, ANS: Mortgage Loan Amount = Selling Price Down Payment DIF: Basic REF: Section ANS: Answers will vary but may include fees for lawyers, credit checks, title searches, surveys, taxes, and the preparation of documents. DIF: Average REF: Section ANS: Each mortgage payment includes an amount for payment of interest and an amount for payment of the principal of the loan. DIF: Average REF: Section

ANS: Mortgage Loan Amount = Selling Price Down Payment DIF: Basic REF: Section 10-1 19.

Computing the Mortgage Loan Amount

10-1 Computing the Mortgage Loan Amount To purchase a new home you need to make a down payment, which can range from 5 to 40 percent of the selling price. Next, you need to find a lender to provide you