Chapter 11 L1 & L2

What is the average cost of the basic goods and services needed to sustain a certain standard of living called?

• Standard of Living

• Fixed-Rate Mortgage

• Mortgage Principal

• Cost of Living

What does "House Poor" mean?

• Owning multiple houses

• Spending a small portion of income on housing

• Spending so much of income on homeownership costs that it's hard to achieve other financial goals

• Having a house with poor construction quality

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

• A mortgage where the principal amount changes every year

• A mortgage that can be paid off at any time without penalty

What is the Mortgage Principal?

• The total amount of interest that needs to be paid over the life of the mortgage

• The initial down payment made when purchasing a home

• The amount borrowed that has to be paid back to purchase a home

• The final payment made to fully own the home

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

• If you plan on staying where you are for more than three years

• If you have a fully funded emergency fund of three to six months of expenses

• If you don't plan on staying where you are for more than three years

• If you want to avoid transaction costs such as real estate agent commissions and closing costs

What is one of the advantages of renting a property mentioned in the text?

• Renting requires you to be responsible for major maintenance and repair costs.

• Renting offers greater flexibility to adapt to changing circumstances.

• Renting ensures that your mortgage payments increase over time.

• Renting binds you to a fixed-rate mortgage.

What is one of the advantages of owning a property mentioned in the text?

• Relocating can be difficult

• Tax deductions can be taken for mortgage interest.

• Owning ensures that your mortgage payments increase over time.

• Owning requires you to pay for all repairs

According to the text, how are rent prices subject to change over time?

• Rent prices decrease consistently due to government regulations.

• Rent prices are fixed once you sign the rental agreement.

• Rent prices are subject to inflation and may increase.

• Rent prices are adjusted according to the landlord's discretion without any market influence.

What happens to your investment when your home's value goes up and your mortgage principal goes down?

• You lose the investment if the home's value goes up.

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

• Your investment becomes null as the mortgage principal goes down.

• You have to invest more money to keep the house.

What is the level of wealth, comfort, material goods, and necessities available to a group of people?

• Fixed-Rate Mortgage

• House Poor

• Standard of Living

• Cost of Living