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Quiz: Are you financially ready to buy a new home?
by Staff
Even if now's the right time in your life to own a home doesn't necessarily mean your finances are also up to the commitment. Test your fiscal fitness in our "Are You Ready to Buy a New Home" quiz and save yourself the hassle of a financial crisis.

What is the recommended percentage of income you should spend on a monthly mortgage payment?

  • 40 to 45 percent
  • 20 to 35 percent
  • 15 to 25 percent

How much of a down payment is recommended and/or required when purchasing a home?

  • 20 percent
  • 80 percent
  • 30 percent

Which type of loan fluctuates with the rise and fall of interest rates?

  • market
  • maturing
  • variable

If you don't have a down payment, you can still buy a house by taking which step?

  • financing the down payment with a separate loan
  • extending the 30-year mortgage term
  • paying extra toward principal each month

Sheriff's sales help you with this kind of purchase:

  • only old, abandoned properties
  • taking over payments for a defaulted mortgage
  • foreclosed properties

Rent-to-own involves what kinds of risks?

  • home value can drop a lot while renting
  • owners can change their minds
  • both

In the economic climate of the 21st century , is it still a good idea to pay for a house with cash up front?

  • yes
  • definitely not
  • maybe

It's recommended you spend what percentage of your monthly income on all bills -- including a new mortgage and old debts?

  • less than 45 percent
  • less than 25 percent
  • less than 36 percent

If a homeowner falls behind and needs to default on a mortgage, which step will prevent poor credit reporting?

  • a short sale
  • a deed in lieu of foreclosure
  • neither

Are brand new houses less of a risk than older ones?

  • fewer expenses and troubles with the new
  • less risky investment with the old
  • both

How many months of mortgage payments should you have stored up in case you lose your job or have a medical emergency?

  • 3 months
  • 12 months
  • 6 months
  • all of the above

You can fall behind how many months before a lender will start foreclosure steps?

  • 4 months
  • 3 months
  • 2 months

PMI stands for which of the following?

  • Principal Mortgage Income
  • Partial Means Index
  • Private Mortgage Insurance

How are property taxes and homeowners insurance calculated each year?

  • they're a fixed amount
  • they depend on property value and premiums
  • by principal balance and salary

Having children can add how much in expenses each month?

  • bucket loads
  • not enough to notice
  • about $1,029

Which resource should you turn to if you get in over your head after buying a new home?

  • nonprofit credit counseling agencies
  • a real estate professional
  • a loan flipper

What percentage of homes in the United States lost value in 2010?

  • more than 23 percent
  • nearly 10 percent
  • about 42 percent

What exactly is a "buyer's market?"

  • when there are more homes on the market than there are buyers
  • when there are more buyers than there are homes on the market
  • it's just a financial expression for a way of thinking about home buying

What do Fannie and Freddie have to do with home buying?

  • A lot. They provide loans outside of bank loans.
  • Maybe nothing in the next few years or so.
  • both

What kind of credit score do lenders look for from potential home buyers?

  • 640 to 760
  • 620 to 700
  • 580 to 620
  • all of the above