CH11 SEC 2 & 4

What is the main idea of the text?

• To compare the costs of different types of mortgages

• To discuss the financial implications of renting versus buying a house

• To explain how to get a mortgage

• To provide a survey on current renters' opinions

What does renting involve according to the text?

• Making a one-time payment for the use of a property

• Periodic payments to a landlord for the use of a property

• Paying a fixed-rate mortgage

• Transferring ownership of a property

What is a fixed-rate mortgage?

• A mortgage with a variable interest rate

• A mortgage with a set interest rate for a set number of years

• The amount borrowed to purchase a home

• A type of rental agreement

What percentage of current renters say that having the money for a down payment is a reason to consider buying a house?

• 77%

• 50%

• 25%

• 90%

Before deciding to buy a house, you should have all of the following EXCEPT:

• A fully funded emergency fund of three to six months of expenses

• Complete freedom from debt

• A job that pays at least twice the mortgage

• Payment and closing costs covered

According to the text, why might renting be a better option if you plan on staying in an area for less than three years?

• Renting is always cheaper than buying.

• Renting allows you to avoid the long-term costs of homeownership.

• Renting offers more flexibility and less commitment than buying.

• Renting includes maintenance and taxes in the monthly payment.

What is one reason mentioned in the text for why homeownership might be considered a better deal in the long term?

• Homeownership always includes maintenance in the mortgage payment.

• Rent prices are not affected by inflation.

• Homeownership allows you to avoid worries about the landlord increasing rent.

• Renting always comes with homeowner's insurance.

What happens to the principal and interest portion of your mortgage payments if you get a fixed-rate mortgage?

• The principal increases and the interest decreases.

• Both the principal and interest portions fluctuate.

• The principal and interest portions are locked in.

• The interest increases and the principal decreases.

What is a financial benefit of your house's value increasing over time?

• You pay more taxes.

• You get back less money when you sell it.

• You're investing money in your house that you'll get back if and when you sell it.

• Your mortgage principal increases.

Under what circumstance might renting be a better option than buying a house?

• If you're planning to live there for many years.

• If you're moving every few years or living in a super expensive city.

• If you have a fixed-rate mortgage.

• If the value of houses is decreasing.