Chapter 8 Independent Living
1. A lease is a written agreement between a bank and a borrower.
2. The length of a room is 21 feet. If a floor plan has a scale of inch = 2 feet, then the length of the room on a
floor plan is 5.25 inches.
3. According to financial experts, a renter should allow no more than 25% of their gross income for rent.
4. A security deposit is used by a landlord to provide protection for the tenants.
5. Front-end ratio is the ratio of monthly housing expenses to all expenses.
6. Aja made a 20% down payment on a house and was approved for a $185,000 mortgage. Therefore, she
should expect her closing costs to be about $3,700 to $12,950.
7. Nathan’s bedroom has a width of 13 feet, a height of 9 feet, and a length of 14 feet. The level of insulation, i,
is 10 and the exposure, e, is 18 because the outside wall faces south. For this room, Nathan should purchase an
air conditioner with a BTU rating of about 5,000 BTUs.
8. The Jacksons sublet their summer cottage during the winter and spring months. For each month they receive
72% of their monthly mortgage of $1,750. The Jackson’s earn $1,260 for the six-month period.
9. Apple-Gate apartment complex uses the line graph of an exponential regression equation to model their rent
increases over the past five years as compared to other complexes in the neighborhood. The Apple-Gate rent
increases are less than other complexes in the area, therefore the slope of their graph should be steeper.
10. How is a condominium different than a single-family dwelling?
11. There are 15,000 shares in Marybeth’s co-op. If Marybeth owns 2% of the cooperative corporation, how
many shares does she own?
12. Natalie just rented an apartment for $900 a month. She was told that the rent will increase 5.5% each year.
About how much will her rent be in 7 years?
13. The McQuires pay a monthly mortgage payment of $938. They also pay a semi-annual property tax bill of
$3,298 and semi-annual homeowner’s insurance of $840. The property tax and insurance are paid monthly into
an escrow account to their lender. What is their monthly payment to their lender?
14. Zane received a quote to move his belongings to his new house. The estimate from the mover is $675 for 6
hours of packing and 5 hours of moving. Zane thinks he can reduce his cost by doing some of the packing and
moving himself. If he does, the cost will decrease to $425 for 4 hours of packing and 3 hours of moving. If the
mover charges a set hourly rate for packing and another set hourly rate for moving, what are these hourly rates?
15. What is NOT another word for renter?
16. Gretchen is refinishing her gazebo that is in the shape of a regular octagon. The length of one side is 3 feet
and the apothem is 3.5 feet. What is the area that Gretchen will be refinishing?
17. Kate and Ashton have been approved for a $200,000 15-year mortgage with an APR of 5.5%. How much of
their first monthly payment will go to interest?
18. Row 6 of the spreadsheet below will contain the formulas to generate an amortization table. What formula
will be entered into D6?
A
B
C
D
E
1
Principal
175,000
2
Interest Rate as a Percent
6.2
3
Length of Loan
30
4
Number of Yearly Payments
12
5
Payment Number
Beginning Balance
Monthly
Payment
Towards Interest
Towards
Principal
6
19. Angela has a monthly gross income of $3,000 and her expenses are $1,200. What is her back-end ratio?
A. 25%
20. Jamal has been approved for a $125,000 loan, 30-year mortgage with an APR of 5.3%. He made a 10%
down payment and is closing on April 5th. How much should he expect to pay in prepaid interest at closing?
21. Ben and Jane have been approved for a $220,000 loan, 30-year mortgage with an APR of 5.82%. What will
be their total interest for the 30 years?
22. What is an ARM?
23. Nancy is buying a house and made a list of her expenses: mortgage payments, utilities, closing costs, pre-
paid interest, origination fee, and insurance payments. Separate each of the six expenses as either a recurring or
a non-recurring cost.
24. Casey has a backyard that is a 50-by-50-foot square. She turned over an irregularly-shaped plot of soil to
plan a garden. To find the area of the garden, 1,500 random points are generated and 420 of the points land
inside the irregularly-shaped garden. What is the area of the garden?
25. When Mary and Jack bought their house, their property taxes were $3,630 annually. After 8 years, their
property taxes are now $4,065.60. What percent increase is this?
26. Nina owns a condominium where she paid $2,340 in maintenance fees this year. If her property taxes are
18% of this amount, how much did Nina pay in property taxes?
27. What type of spreadsheet or table shows an accounting of the unpaid principal, monthly payment, amount
allocated toward principal, and the amount allocated towards interest for a mortgage?
28. Garrett and Erin are borrowing $170,000 to purchase a new home. They have been approved for a 30-year
loan with an interest rate of 5.75%. What will be their monthly payment?
29. Name four types of fees you may incur during the closing on the purchase of a new home.
30. Craig and Tammy recently sold their home for $225,000. Their loan balance is $135,680. What is their
equity before paying seller’s expenses?