Mortgage and Home Ownership Quiz
How much do you know about the mortgage and home ownership? Well, we are about to find that out as you take this mortgage and how ownership quiz we have made for you. A mortgage is known as a type of loan that is used to purchase or maintain a home, property, land, or other types of real estate. So, to test your knowledge about the mortgage and home ownership and to learn more, take these questions, and try to answer as many of them correctly as you can. Wish you the best of luck!
- 1.
In a mortgage, what is the amount of money borrowed called?
- A.
Principle
- B.
Principal
- C.
Interest
- D.
None of these
Correct Answer
B. PrincipalExplanation
The amount of money borrowed in a mortgage is called the principal. This is the initial loan amount that the borrower receives from the lender. It is the base amount on which interest is calculated and is typically repaid over the course of the loan term. The principal does not include any interest or additional fees that may be associated with the mortgage.Rate this question:
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- 2.
If a person buys a home for $300,000, and that person has agreed to a 20 percent down payment, how much will that person have to pay?
- A.
$40,000
- B.
$50,000
- C.
$60,000
- D.
$70,000
Correct Answer
C. $60,000Explanation
The person will have to pay $60,000 as a down payment. A 20 percent down payment means that the person will need to pay 20 percent of the total cost of the home, which is $300,000. 20 percent of $300,000 is $60,000.Rate this question:
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- 3.
What is it called when you obtain new financing for a thing you already own?
- A.
Refinancing
- B.
Remortgage
- C.
Double financing
- D.
None of these
Correct Answer
A. RefinancingExplanation
Refinancing refers to the process of obtaining new financing for something that you already own. It typically involves replacing an existing loan or mortgage with a new one that offers better terms, such as lower interest rates or monthly payments. This allows the borrower to save money or access additional funds. Remortgage is a term commonly used in the UK to describe the same concept. Double financing is not the correct term for this situation. Therefore, the correct answer is Refinancing.Rate this question:
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- 4.
Why do many people prefer a fixed-rate mortgage?
- A.
Because it's cheap
- B.
Because it's for long-term
- C.
Because it's unpredictable
- D.
Because it's predictable
Correct Answer
D. Because it's predictableExplanation
Many people prefer a fixed-rate mortgage because it is predictable. With a fixed-rate mortgage, the interest rate remains the same throughout the entire loan term. This allows borrowers to accurately plan and budget their monthly mortgage payments, as they know exactly how much they will owe each month. In contrast, variable-rate mortgages can fluctuate with market conditions, making it difficult for borrowers to anticipate and budget for potential increases in their monthly payments. Therefore, the predictability of a fixed-rate mortgage is often seen as a more secure and reliable option for many individuals.Rate this question:
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- 5.
If a person buys a home for $500,000, and that person has agreed to a 15 percent down payment, how much will that person have to pay?
- A.
$75,000
- B.
$85,000
- C.
$95,000
- D.
$100,000
Correct Answer
A. $75,000Explanation
If a person buys a home for $500,000 and agrees to a 15 percent down payment, they will have to pay 15 percent of $500,000. To calculate this, we multiply $500,000 by 0.15, which equals $75,000. Therefore, the person will have to pay $75,000.Rate this question:
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- 6.
Why do homeowners typically pay property taxes?
- A.
To help finance state
- B.
To help local governments
- C.
Both A & B
- D.
None of these
Correct Answer
C. Both A & BExplanation
Homeowners typically pay property taxes to help finance state and local governments. Property taxes are a major source of revenue for both levels of government, and they are used to fund various public services and infrastructure projects. By paying property taxes, homeowners contribute to the overall functioning and development of their state and local communities.Rate this question:
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- 7.
Which of these is a usual benefit of a person with a good credit score?
- A.
Someone with a high credit score can have the advantage of paying no interest.
- B.
Someone with a high credit score can have the advantage of making a lower down payment.
- C.
Someone with a high credit score can have the advantage of paying half the loan amount.
- D.
None of these
Correct Answer
B. Someone with a high credit score can have the advantage of making a lower down payment.Explanation
Having a high credit score is typically beneficial because it allows individuals to qualify for better loan terms and lower interest rates. A lower down payment is one of the advantages that can be obtained with a good credit score, as lenders perceive borrowers with good credit as less risky and are more willing to offer favorable terms. However, it is important to note that the statement does not imply that someone with a high credit score always has the advantage of making a lower down payment, but rather that it is a possible benefit.Rate this question:
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- 8.
Which of these is a true statement about mortgage for home ownership?
- A.
There are additional fees that are involved in taking out a mortgage.
- B.
There are additional costs that are involved in taking out a mortgage.
- C.
A lower down payment can increase the interest rate.
- D.
All of these
Correct Answer
D. All of theseExplanation
All of these statements are true about mortgages for home ownership. Taking out a mortgage involves additional fees and costs, which are typically associated with the loan origination, appraisal, credit report, and other related services. Additionally, a lower down payment can result in a higher interest rate, as it represents a higher risk for the lender. Therefore, all three statements accurately describe the various aspects and considerations involved in obtaining a mortgage for home ownership.Rate this question:
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- 9.
For homeownership, when people take out a mortgage, usually how long do they pay back the money?
- A.
In many years
- B.
In one or two years
- C.
In a few months
- D.
In one or two months
Correct Answer
A. In many yearsExplanation
When people take out a mortgage for homeownership, they typically pay back the money over a long period of time, often spanning many years. This is because mortgages are large loans that are used to finance the purchase of a home, and it is not feasible for most individuals to repay such a significant amount of money in a short period. Therefore, the correct answer is "In many years."Rate this question:
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- 10.
Which of these can affect a mortgage the most?
- A.
The low amount for the down payment
- B.
A bad credit score
- C.
Having taken no loans before
- D.
None of these
Correct Answer
B. A bad credit scoreExplanation
A bad credit score can affect a mortgage the most because it indicates a higher risk for the lender. A low credit score suggests that the borrower has a history of late payments, defaulting on loans, or having high levels of debt. This makes lenders less likely to approve the mortgage application or offer favorable terms. A bad credit score can result in higher interest rates, larger down payment requirements, or even denial of the mortgage altogether. It is important to maintain a good credit score to increase the chances of getting approved for a mortgage and securing better loan terms.Rate this question:
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