FCS 340 Exam 3 | Questions with 100% Verified Answers |
Latest Update 2026/2027
Question: Traditional financial guidelines suggest that your home should cost about __________
times your annual income
Answer: 2 1/2 or (25 or 30 percent of your take-home pay)
Question: List advantages of renting
Answer: Easy to move ; Fewer responsibilities for maintenance; Minimal financial commitment
Question: List disadvantages of renting
Answer: No tax benefits; Limitations regarding remodeling; Restrictions regarding pets, other
activities
Question: The opportunity to have another person take over rent payments and live in the
rental unit is called __________________________.
Answer: Subletting
Question: List advantages of buying a home
Answer: Pride of ownership; financial benefits; lifestyle flexibility
Question: List disadvantages of buying a home
Answer: Financial commitment; Higher living expenses; limited mobility
Question: A legal form of ownership in which the owners pay a monthly fee for maintenance
of the common areas
Answer: Condominium
Question: List important factors to consider when selecting a contractor to build a home
Answer: contractor's experience and reputation; contractors relationship with the architect,
material suppliers, electricians, plumbers, carpenters, etc.; payment arrangements
during
construction
Question: In order to purchase a home, most people need to save for a _______________________
before purchasing
Answer: Down Payment
Question: List important considerations in choosing a home to purchase
Answer: Location; price & quality; zoning laws, schools
, Question: What should a home buyer consider when evaluating the actual house?
Answer: Home Inspection (Required by mortgage company), Exterior Facilities, Exterior
Construction, Interior Construction, Interior Design
Question: What does the real estate agent do?
Answer: show homes that meet your needs; present your offer; negotiate the price; assist in
obtaining financing; and represent you at the closing
Question: When buying an older house, a buyer should get a ____________________ to find out
about possible problems with the house.
Answer: Home Inspection
Question: After submitting an offer on a house, the seller may choose to provide
a________________, rejecting the submitted offer
Answer: counteroffer
Question: What is a contingency clause?
Answer: states the purchase agreement of a home is binding only if a certain event occurs;
i.e. the
contract may be valid only if the buyer obtains financing for the home purchase
within a
certain time perior
Question: What is an appraisal?
Answer: An assessment of the market value of the property
Question: Why does the mortgage company conduct an appraisal?
Answer: Because they are not going to lend more money out than what the house is worth
Question: What is earnest money?
Answer: A portion of the purchase price of the home deposited as evidence of good faith
Question: Define points
Answer: Prepaid interest charged by the lender, Each discount point is equal to 1 percent of
the
loan amount and should be viewed as a premium you pay for obtaining a lower
mortgage rate.
Question: What is PMI? When is a buyer required to purchase it?
Answer: Private Mortgage Insurance; for loans with loan-to-value (LTV) percentages in excess
of
80% (the buyer put down less than 20% of the home's value upon purchase).
Latest Update 2026/2027
Question: Traditional financial guidelines suggest that your home should cost about __________
times your annual income
Answer: 2 1/2 or (25 or 30 percent of your take-home pay)
Question: List advantages of renting
Answer: Easy to move ; Fewer responsibilities for maintenance; Minimal financial commitment
Question: List disadvantages of renting
Answer: No tax benefits; Limitations regarding remodeling; Restrictions regarding pets, other
activities
Question: The opportunity to have another person take over rent payments and live in the
rental unit is called __________________________.
Answer: Subletting
Question: List advantages of buying a home
Answer: Pride of ownership; financial benefits; lifestyle flexibility
Question: List disadvantages of buying a home
Answer: Financial commitment; Higher living expenses; limited mobility
Question: A legal form of ownership in which the owners pay a monthly fee for maintenance
of the common areas
Answer: Condominium
Question: List important factors to consider when selecting a contractor to build a home
Answer: contractor's experience and reputation; contractors relationship with the architect,
material suppliers, electricians, plumbers, carpenters, etc.; payment arrangements
during
construction
Question: In order to purchase a home, most people need to save for a _______________________
before purchasing
Answer: Down Payment
Question: List important considerations in choosing a home to purchase
Answer: Location; price & quality; zoning laws, schools
, Question: What should a home buyer consider when evaluating the actual house?
Answer: Home Inspection (Required by mortgage company), Exterior Facilities, Exterior
Construction, Interior Construction, Interior Design
Question: What does the real estate agent do?
Answer: show homes that meet your needs; present your offer; negotiate the price; assist in
obtaining financing; and represent you at the closing
Question: When buying an older house, a buyer should get a ____________________ to find out
about possible problems with the house.
Answer: Home Inspection
Question: After submitting an offer on a house, the seller may choose to provide
a________________, rejecting the submitted offer
Answer: counteroffer
Question: What is a contingency clause?
Answer: states the purchase agreement of a home is binding only if a certain event occurs;
i.e. the
contract may be valid only if the buyer obtains financing for the home purchase
within a
certain time perior
Question: What is an appraisal?
Answer: An assessment of the market value of the property
Question: Why does the mortgage company conduct an appraisal?
Answer: Because they are not going to lend more money out than what the house is worth
Question: What is earnest money?
Answer: A portion of the purchase price of the home deposited as evidence of good faith
Question: Define points
Answer: Prepaid interest charged by the lender, Each discount point is equal to 1 percent of
the
loan amount and should be viewed as a premium you pay for obtaining a lower
mortgage rate.
Question: What is PMI? When is a buyer required to purchase it?
Answer: Private Mortgage Insurance; for loans with loan-to-value (LTV) percentages in excess
of
80% (the buyer put down less than 20% of the home's value upon purchase).
