The H.O.M.E.

IQ Quiz
Test your knowledge of the home-buying process from start to finish, with the H.O.M.E. IQ Quiz! Answers are provided at the end.

Basic Finance
1. A blueprint for understanding your spending is called a(n) a. investment guide b. tax guide c. spending diary d. spending plan A critical strategy to help you reach your financial goals is a. spending whatever you make b. saving money c. maxing out your credit accounts d. getting a loan The benefits of keeping your money in a financial institution include a. convenience b. cost benefits c. safety d. all of the above This type of financial institution provides mortgage loans, but does not take deposits from customers a. mortgage bank b. credit union c. bank d. savings and loan (S&L) Alternative financial service providers include all of the following EXCEPT a. payday lenders b. rent to own stores c. check cashing outlets d. credit unions 6. The automatic deposit of wages and benefits into your bank account is called a. wage garnishment b. direct deposit c. transfers d. deposit slip If you lose your wallet you should a. file a police report b. contact your bank c. cancel your credit cards d. all of the above This type of loan requires collateral a. secured loan b. unsecured loan c. personal loan d. student loan One way to save money automatically is a. calendar reminders b. automatic transfers c. employee bonuses d. tax refunds

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10. This helps you to avoid dipping into your savings for unexpected expenses a. emergency fund b. daily spending diary c. spending plan d. discipline

How The Credit Affects You Quiz H.O.M.E. IQ
11. This allows you to borrow money in exchange for a promise that you will repay the money at a later date a. savings account b. credit c. credit score d. insurance 12. This type of credit requires you to sign a contract to repay a fixed amount of money in equal payments over time a. good credit b. open accounts c. revolving credit d. installment credit 13. Ways to establish credit include all of the following EXCEPT a. maintain a clean driving record b. get a secured credit card c. establish a nontraditional credit history d. get a co-signor for a loan 14. The most important thing you can do to build good credit is to a. call your creditor(s) b. pay for everything with cash c. pay less than the minimum amount due on your bills d. pay all of your bills on time 15. These organizations collect information about you and your credit history a. collection agencies b. credit-reporting agencies c. non-profit organizations d. savings and loans 16. Factors that affect a credit score include all of the following EXCEPT a. amount of debt b. payment history c. age of borrower d. length of credit history 17. Which of the following is NOT a good way to improve your credit? a. work with a credit repair clinic that charges you money b. correct errors on your credit report c. pay your bills on time d. change your spending habits 18. Which statement is NOT true? a. Good credit scores are a vital part of your financial health. b. Lenders use your credit score when deciding when to ap prove a loan. c. Lenders use your credit score when setting interest rates. d. Credit scores do not change over time. 19. A legal procedure to have debts discharged, this can have far-reaching effects on your financial status a. credit counseling b. collection agency c. bankruptcy d. foreclosure 20. The following are ways you can help prevent identity theft EXCEPT a. throw away pre-approved credit card offers without shredding them b. protect your incoming and outgoing mail c. practice Internet security d. limit access to your personal information

Preparing for Home The H.O.M.E. Ownership IQ Quiz
21. The amount of equity you have in your home is the a. price it would sell for today b. current sales price minus the home loan balance c. price you originally paid minus the home loan balance d. the current sales price minus what you originally paid 22. All of the following are financial benefits to home ownership EXCEPT a. potential tax deductible interest payments b. potential increased value of the home c. growth of equity in the home d. lasting friendships with neighbors 23. A home loan payment may include all of the following EXCEPT a. principal b. interest c. taxes d. maintenance and repairs fund 26. Which of the following types of loans is called a “government loan”? a. conforming loan b. non-conforming loan c. FHA insured loan d. jumbo loan 27. A home loan where the interest rate may go up or down depending on changes in an economic indicator such as Treasury Securities is called a(an) a. interest-only loan b. negative amortization loan c. balloon loan d. adjustable-rate mortgage 28. The type of home loan that provides the stability of equal payments along with the lowest monthly payment is a(an) a. 15-year fixed-rate loan b. 30-year fixed-rate loan c. adjustable-rate loan d. pay-option ARM

24. In the Four C’s of Credit, the one that refers to the amount of money you have available for down payment and closing costs is a. capital 29. The type of insurance that protects the lender in case a borrower b. capacity defaults is called c. credit a. private mortgage insurance (PMI) d. collateral b. credit insurance c. disability insurance 25. A home loan where you make equal payments that are applied d. life insurance first to interest and then to principal and gradually reduce the principal balance to zero is a(an) 30. All of the following are abusive practices that a predatory lender a. balloon loan might use to take advantage of a borrower EXCEPT b. fully amortized loan a. encouraging you to lie about your income c. interest only loan b. providing a loan beyond your ability to pay d. partially amortized loan c. charging exorbitant fees for real or nonexistent services d. offering a non-prime loan at a higher interest rate with a built-in rate reduction feature in return for timely payments and improved credit worthiness

Steps for Buying a The H.O.M.E.Home Quiz IQ
31. The first step in the home-buying process should be to a. get pre-qualified and pre-approved b. determine your wants and needs c. select a real estate professional d. make an offer 32. Which of the following items on your “wish list” is likely to be a “want” rather than a “need”? a. three bedrooms b. two bathrooms c. washer/dryer d. fireplace 36. The best way for a buyer to be assured the physical structure of the house is sound and that all major systems are in normal working order is to have a a. C.L.U.E® report b. home inspection c. homeowner warranty d. walk-through inspection 37. The person who reviews a loan application and approves, denies, or approves the loan with conditions is the a. loan officer b. processor c. underwriter d. settlement agent

33. The real estate agent who lists a property for sale and places the listing information in a multiple-listing system always represents the a. seller 38. If you want to be sure that any damaged portions of your home b. buyer would be restored to their original condition in the event of a c. both the seller and the buyer disaster you should have d. neither the seller nor the buyer a. ACV (actual cash value) homeowners insurance b. replacement value homeowners insurance 34. Once you have found a home you would like to purchase, the c. umbrella policy insurance next step is to d. title insurance a. go to the closing b. have a final inspection 39. The following are all steps you may want to take if your home c. purchase a homeowner warranty loan is not approved EXCEPT d. make an offer a. give up – you will never qualify for a loan b. work to improve your credit and reapply at a later time 35. Elements that should be included in any contract to buy a home c. look for additional sources of cash for down payment and include all of the following EXCEPT closing costs a. personal property that conveys d. talk to a nonprofit counselor about ways to reduce your debt b. financing contingency c. borrower’s credit report 40. The document that shows all credits and debits to both buyer d. closing date and seller at the closing is the a. Good Faith Estimate b. Truth-in-Lending Statement c. HUD-1 Uniform Settlement Sheet d. Note and mortgage

Life The as a HomeownerIQ Quiz H.O.M.E.
41. A key way to protect your home AND your financial security is by a. reading financial books b. maintaining insurance coverage c. painting your home d. investing in stocks and bonds 42. One of the first things you should do when your new home is officially yours is to a. change the locks b. paint the kitchen c. get a house inspection d. buy new appliances 43. Important legal documents, like the deed to your house, should be stored in a a. house file b. kitchen drawer c. safe deposit box d. none of the above 44. The most important thing you can do if you have difficulty paying your home loan is to a. contact your lender or servicer b. sell your home c. create a budget d. take out a home equity loan 45. Which of the following are ways lenders may allow you to make a home loan payment? a. automatic deductions from your account b. payment through a secure Web site c. mailing payment with your monthly statement d. all of the above 46. All of the following are reasons you may need to increase your insurance coverage EXCEPT a. you have made improvements that increased the value of your home b. you bought a smoke detector c. you have purchased personal property such as jewelry or expensive computer equipment d. you have renovated your home to increase its value 47. Doing this will help you maintain your home and minimize unexpected repair work a. regular home maintenance b. home warranty c. landscaping d. insurance 48. A tip for finding a good contractor is a. get recommendations from family and friends b. contact different contractors and compare services c. ask contractors for copies of licenses and insurance certificates d. all of the above 49. This results when you pay down your home loan and the value of your home increases a. you prepay your home loan b. you build home equity c. you pay increased taxes d. your credit improves 50. As a homeowner, you may be the target of various scams such as a. equity stripping b. multiple refinancing c. bait and switch loans d. all of the above

Answer Key Basic Finance The H.O.M.E. IQ Quiz
1. 2. 3. 4. 5. (d) spending plan. A spending plan is your personal plan for managing your spending and saving. (b) saving money. Consistently saving money is one of the most important things you can do to reach your goals. (d) all of the above. There are many benefits to keeping your money in a financial institution. These are just a few benefits that a financial institution provides. (a) mortgage bank. Mortgage banks specialize in making mortgage loans and do not take deposits from customers. (d) credit unions. Alternative financial service providers include payday lenders, rent to own stores and check cashing outlets. They may seem convenient, but their fees are significantly higher than what traditional financial institutions, such as banks and credit unions, charge. (b) direct deposit. Some employers will allow you to have your paycheck automatically deposited into your account at no charge to you. (d) all of the above. If you lose your wallet and credit cards, it’s important to also notify the three major credit-reporting agencies so that they can put a fraud alert on your credit report. (a) secured loan. A secured loan, such as a home loan, gives the lender legal rights to your home if you fail to repay. (b) automatic transfers. If possible, have your bank automatically transfer a specified amount of money into your savings account each month.

6. 7. 8. 9.

10. (a) emergency fund. An emergency fund can help you cover unexpected expenses when you need money immediately.

Answer Key How The Credit Affects You Quiz H.O.M.E. IQ
11. (b) credit. Credit allows you to borrow money. In addition to repaying the money owed, you typically pay interest and fees. 12. (d) installment credit. An example of installment credit is an auto loan. 13. (a) maintain a clean driving record. Your driving record does not affect or establish credit. 14. (d) pay all of your bills on time. Even if you can only afford to pay the minimum due, make sure you send all of your payments in on time. 15. (b) credit-reporting agencies. Also known as credit bureaus, these agencies compile information about your payment habits and provide it to lenders who inquire about your credit worthiness. 16. (c) age of borrower. Age, race, national origin, sex, marital and employment status are not considered in compiling your credit score. 17. (a) work with a credit repair clinic that charges you money for their services. You should avoid working with credit repair clinics that promise to repair your credit for a fee. Many are dishonest; charging huge fees for services you could easily do yourself at no cost. Instead, work with a reputable non-profit credit counselor. 18. (d) Credit scores do not change over time. Credit scores do in fact change as the elements in your credit report change. That’s why it is so important to make sure the information in your credit report stays accurate. 19. (c) bankruptcy. Although bankruptcy is a legal way to discharge debts, it is no easy way out. Bankruptcy has serious longterm consequences. 20. (a) throw away pre-approved credit card offers without shredding them. Throwing away personal information makes you vulnerable to thieves who look through your trash. Always shred papers containing personal information before you put them in the trash.

Answer Key Preparing for Home The H.O.M.E. Ownership IQ Quiz
21. (b) current sales price minus the home loan balance. The amount of equity is the difference between the current value of the home minus the home loan balance still due. 22. (d) lasting friendships with neighbors. Developing lasting friendships with neighbors is a personal benefit derived from ownership, not a financial benefit. 23. (d) maintenance and repairs fund. The home loan payment is typically made up of principal, interest, taxes, and insurance (PITI). A new homeowner should also set aside money each month for a maintenance and repairs fund. 24. (a) capital. The money available for down payment and closing costs is capital. Capacity is your ability to repay the loan. Credit is your history of making payments. Collateral is the appraised value of your home. 25. (b) fully amortized loan. At the end of the loan term, the principal balance is completely paid. A balloon loan is a partially amortized loan, with one final large payment of the remaining loan balance. With an interest-only loan no payment is made towards principal. 26. (c) FHA insured loan. Government loans are usually FHA-insured or VA-guaranteed. All other mortgage loans are either conforming or non-conforming conventional loans. 27. (d) adjustable-rate mortgage. The formula used to determine the interest rate on an adjustable-rate mortgage is based on a chosen economic index plus a margin set by the lender. Pre-determined caps may limit the increase in the interest rate. 28. (b) 30-year fixed-rate loan. The 15-year fixed rate loan may have a slightly lower interest rate but is paid off in 15 years, which results in a higher monthly payment. 29. (a) private mortgage insurance (PMI). Mortgage insurance is usually required whenever a borrower has less than a 20% down payment. 30. (d) offering a non-prime loan at a higher interest rate with a built-in rate reduction feature in return for timely payments and improved credit worthiness. A non-prime loan is not predatory and may offer a high risk borrower the opportunity to purchase a home by paying a higher interest rate and additional points or fees. It also provides an opportunity for the borrower to establish an improved credit rating by consistently paying on time.

Answer Key Steps for Buying a The H.O.M.E.Home Quiz IQ
31. (a) get pre-qualified and pre-approved. Getting pre-qualified should be the first step since this will help you know what price range you can afford. Then get pre-approved for a loan before you start looking at properties for sale. 32. (d) fireplace. Almost all houses today come with a built-in heating system. A fireplace is very nice, but not really a “need.” 33. (a) seller. The listing agent always represents the seller. Some states allow for dual agency where the same agent can represent both the seller and the buyer in the same transaction. This could result in a conflict of interest on the part of the agent. 34. (d) make an offer. Your real estate agent or attorney will put together the document that contains all of the terms, conditions and contingencies of the offer. 35. (c) borrower’s credit report. The seller does not have the right to review the borrower’s credit report. The financing contingency protects the buyer from losing the deposit if unable to obtain the financing described in the contract. 36. (b) home inspection. An offer to purchase should be made contingent on having a home inspection done within 10-15 days, and the buyer must be satisfied that the home is in good condition. If there are deficiencies, the buyer can request that the seller make repairs or replacements. The seller can agree to take care of the requested items or refuse, in which case the buyer can withdraw from the contract. 37. (c) underwriter. Each of the people involved in the loan approval process has specific duties and responsibilities but the role of the underwriter is critical. This person decides if you will receive the loan or not. 38. (b) replacement value homeowners insurance. Replacement insurance means that the damage would be repaired or restored with something of like kind or value. Actual cash value insurance means taking the replacement value and then subtracting for any years of depreciation. 39. (a) give up. If you don’t get approved for a home loan, don’t give up on the dream of owning a home. Find out why your loan application was not approved and then work to improve your financial situation. You may also want to consider looking for a less expensive home. 40. (c) HUD-1 Uniform Settlement Sheet. The Real Estate Settlement Procedures Act requires that the HUD-1 Uniform Settlement Sheet be used on almost all closings. All closing costs are itemized with credits and debits for both seller and buyer shown on the sheet.

Answer Key Life The as a HomeownerIQ Quiz H.O.M.E.
41. (b) maintaining homeowner’s insurance. Homeowner’s insurance provides damage protection for your home and personal property from a variety of events such as fire, burglary, storms, vandalism, and more. It also enables you to replace your belongings if they have been stolen, damaged or destroyed. 42. (a) change the locks. Since you do not know who has copies of the old keys, it is smart to change the locks and get new keys made. 43. (c) safe deposit box. Important legal documents should always be kept in a safe deposit box. 44. (a) contact your lender or servicer. Contacting your lender or servicer early is essential. There may be workout plans you could qualify for that can help you avoid losing your home. The longer you wait to contact the lender, the less likely they’ll be able to help you. 45. (d) all of the above. There are a number of different ways that you can pay your home loan. Perhaps the easiest is to set up an automatic deduction from your checking or savings account. This way you’ll never forget to make a payment and you won’t have to worry about your payments being late. 46. (b) you bought a smoke detector. You should review your insurance coverage annually to make sure it is adequate, but be sure to also review it whenever you increase the value of your home or the belongings in it. 47. (a) regular home maintenance. Performing regular, preventative home maintenance will help keep your home in good working condition and will stop small repairs from growing into larger, more expensive repairs. 48. (d) all of the above. Your home is probably your most valuable asset, so it’s important to hire a quality contractor to repair it. You’ll want to use these tips to find a reputable contractor in your area. 49. (b) you build home equity. Home equity is the current market value of your home minus any outstanding liens or home loan balances. It is one of the key wealth-building benefits of owning a home. You may be able to borrow money against this equity in the form of a home loan or home equity line of credit. 50. (d) all of the above. Homeowners, especially those who have a good deal of equity in their homes, frequently receive refinance and cash-out offers for loans by mail, telephone, and door-to-door. Be careful before considering any loan offer that seems too good to be true or taps into the equity you have worked so hard to build.

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