Buying A House | Applied Math Quiz

Explanation
A mortgage is a loan that is specifically designed to help individuals purchase a home. It is a financial agreement between a borrower and a lender, typically a bank or a mortgage company, where the lender provides funds to the borrower to buy a property. The borrower then agrees to repay the loan over a set period of time, usually with interest. Mortgages are a common and popular way for individuals to finance the purchase of a home, allowing them to spread out the cost over several years.

Explanation
Closing is the final step in the loan process. It is the point at which all necessary documents are signed, funds are disbursed, and the loan is officially completed. During the closing, the borrower and lender review and sign the loan documents, including the promissory note and mortgage or deed of trust. The closing also involves the transfer of ownership from the seller to the buyer. Once the closing is complete, the loan is considered finalized, and the borrower is responsible for making the agreed-upon payments.

Explanation
If you don't make your payments on time, it can negatively impact your credit rating. A credit rating is a measure of your creditworthiness and is used by lenders to determine your ability to repay debts. Late or missed payments can be reported to credit bureaus, resulting in a lower credit score. This can make it more difficult for you to obtain credit in the future, such as loans or credit cards, and may also lead to higher interest rates.

Explanation
Property tax is a tax that individuals pay annually, which is calculated based on the market value of their property. This tax is specific to real estate and is used to fund local government services such as schools, roads, and public safety. Property tax is different from income tax, sales tax, and mortgage tax, as it is solely based on the value of the property owned by an individual or business.

Explanation
Homeowner's insurance is the correct answer because it specifically covers losses to one's property caused by fire, wind, and other similar events. This type of insurance is designed to protect homeowners from financial loss in the event of damage to their property, such as a fire or windstorm. It provides coverage for repairs or replacement of the home and its contents, as well as liability protection if someone is injured on the property.

Explanation
Moving into an apartment typically involves various costs, such as last month's rent, security deposit, and first month's rent. However, a cleaning service is not a cost of moving into an apartment. While it is common for tenants to clean the apartment before moving out, hiring a professional cleaning service is optional and not a necessary expense when moving into a new apartment.

Explanation
Property tax on a house is typically paid on a yearly basis. This is because property taxes are levied by local governments to fund various public services and infrastructure. Paying property tax annually allows the government to collect the necessary funds to maintain these services and make improvements to the community. Additionally, paying property tax yearly provides homeowners with a predictable schedule for budgeting and planning their finances.

Explanation
To obtain a mortgage to buy a house, you would typically go to a bank. Banks are financial institutions that offer various services, including mortgage loans. They have specialized departments or loan officers who can guide you through the mortgage application process, assess your eligibility, and provide you with the necessary funds to purchase a house. The DMV is responsible for vehicle-related services, the realtor helps you find and purchase a house, and the post office deals with mail-related services, none of which are directly related to obtaining a mortgage.

Explanation
A discount point that is 1% of the purchase price of a house is commonly known as a "Loan Point". This refers to a fee paid upfront by the borrower to the lender in order to lower the interest rate on the mortgage loan. By paying this fee, the borrower can reduce their monthly mortgage payments over the life of the loan.

Explanation
To calculate the amount of carpet needed for a room, you must know the length and width of the room. This is because carpets are typically sold by the square foot, and the area of the room is determined by multiplying the length by the width. By knowing these measurements, you can accurately determine the amount of carpet required to cover the entire floor space of the room.