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Quizzes > Quizzes for Business > Finance

Master the Home Buyer Knowledge Quiz

Test Your Home Purchase Know-How Today

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting elements related to home buying for a knowledge quiz.

Whether you're a first-time home buyer or a seasoned investor, this home buying quiz is designed to sharpen your understanding of key steps in property purchase. Joanna Weib invites participants to test their mortgage know-how, inspection insights, and negotiation skills in an engaging format. This free home buying quiz has 15 multiple-choice questions that can be fully customized in our editor to match any curriculum. After you finish, compare your results with related Home Seller Knowledge Quiz or explore our Home, Garden and Finance Knowledge Quiz. Ready for more? Check out all quizzes to expand your learning journey.

What is typically the first step in the home buying process?
Submitting an offer
Closing on the property
Getting preapproved for a mortgage
Scheduling a home inspection
Getting preapproval is the initial step because it determines your budget and shows sellers you are a qualified buyer. It also streamlines the mortgage application when you find a property.
Which mortgage type features the same interest rate for the entire loan term?
Balloon mortgage
Adjustable-rate mortgage
Interest-only mortgage
Fixed-rate mortgage
A fixed-rate mortgage maintains the same interest rate and monthly payment over the life of the loan. Other mortgage types adjust rates or payments based on market conditions.
What is the name of the report that compares recently sold similar homes to estimate a property's value?
Comparative Market Analysis
Zoning report
Home appraisal
Tax assessment report
A Comparative Market Analysis (CMA) uses data on nearby similar sales to estimate market value. An appraisal is a formal valuation by a licensed professional, not just a comparative report.
In a purchase agreement, what is the purpose of an earnest money deposit?
To compensate the seller for appraisal fees
To show the buyer's good faith commitment
To pay the final down payment
To cover home inspection costs
Earnest money demonstrates the buyer's serious intent and is credited toward closing costs or down payment. It protects the seller if the buyer defaults.
During the closing process, what typically happens?
Applying for mortgage preapproval
Inspecting the property for the first time
Completing major renovations
Signing legal documents and transferring ownership
Closing involves signing final documents, paying closing costs, and transferring the deed to the new owner. Inspections and preapprovals occur earlier in the process.
Which loan type is insured by the Federal Housing Administration and often allows lower down payments?
Jumbo loan
Conventional loan
FHA loan
Bridge loan
An FHA loan is backed by the Federal Housing Administration and typically requires a lower down payment. Conventional loans are not government insured and jumbo loans exceed conforming limits.
Lenders often view a debt-to-income (DTI) ratio above which percentage as high risk?
60%
43%
50%
28%
A DTI above 43% is generally considered high risk and may limit loan approval options. Lower DTI ratios indicate stronger ability to manage mortgage payments.
What does a professional appraisal primarily determine?
A guaranteed future resale value
The structural condition
Potential environmental hazards
The fair market value of the property
An appraisal estimates fair market value based on recent comparables and property condition. It does not guarantee future resale values or inspect environmental issues comprehensively.
Which clause in an offer automatically increases your bid transparently if a higher offer emerges, up to a set maximum?
Escalation clause
Financing contingency
Inspection contingency
Right of first refusal
An escalation clause raises your offer incrementally over competing bids up to a buyer-specified limit. Contingencies protect buyers rather than adjusting offer amounts automatically.
What information is detailed in the Closing Disclosure document provided before closing?
Home inspection findings
Property zoning restrictions
Homeowners' association rules
Final loan terms and closing cost breakdown
The Closing Disclosure outlines exact loan terms, interest rates, and closing costs you will pay. Inspections and zoning details are provided in other documents.
After purchasing a home, how often is servicing the HVAC system typically recommended?
Monthly
Bi-annually (twice a year)
Only when it breaks down
Every five years
Servicing HVAC systems twice a year helps maintain efficiency and prevents breakdowns. Annual or less frequent service may miss seasonal wear and hidden issues.
A seller's market in real estate is characterized by:
Equal buyers and sellers
Government price controls
More listings than buyers
More buyers than available listings
In a seller's market, limited inventory leads to higher competition among buyers. More listings than buyers indicates a buyer's market.
What is the purpose of the Loan Estimate provided by a lender?
To appraise the property value
To disclose the seller's reserve price
To inspect property defects
To outline estimated loan terms and closing costs
The Loan Estimate gives borrowers an early estimate of interest rates, monthly payments, and closing costs. It is not an appraisal nor a seller disclosure document.
Which mortgage program allows eligible veterans to purchase homes with no down payment?
Conventional loan
FHA loan
USDA loan
VA loan
VA loans are backed by the Department of Veterans Affairs and often require no down payment for qualified veterans. FHA and USDA loans require down payments or geographical restrictions.
Which index tracks changes in home prices over time in a specific market?
House Price Index
Purchasing Managers Index
Dow Jones Industrial Average
Consumer Price Index
The House Price Index measures residential real estate price changes in a given area. Other indices track consumer goods, stocks, or manufacturing activity.
Approximately what is the monthly principal and interest payment on a 30-year fixed $200,000 mortgage at 4% interest?
$826.45
$667.04
$1,200.56
$954.83
Using the standard mortgage formula with a 4% rate and 360 payments, the monthly principal and interest is about $954.83. This excludes taxes and insurance.
If property taxes of $3,600 annually are paid in arrears and you close on July 1, how much tax credit does the buyer receive for prepayment from January through June?
$2,700
$900
$1,800
$3,600
Prorated credit equals half the annual tax ($3,600/12Ă - 6), or $1,800. Sellers pay their portion up to closing, so buyers receive credit for prior months.
Which negotiation technique sets an initial offer to influence the counterparty's perception of value?
Escalation
Splitting the difference
Anchoring
Walking away
Anchoring involves presenting a specific initial offer to frame negotiations around that value. Other tactics adjust terms rather than set the reference point.
What document provides the chain of ownership and any liens on a property?
Home inspection report
Property deed
Title report
Survey plat
A title report details the legal history of ownership and discloses liens or encumbrances. The deed transfers ownership, while surveys and inspections cover boundaries and condition.
A common rule of thumb is to budget what percentage of a home's purchase price annually for maintenance and repairs?
10 - 12%
0.1 - 0.5%
1 - 4%
5 - 6%
Industry guidance recommends setting aside roughly 1 - 4% of the home's value each year for maintenance. This helps cover unexpected repairs and routine upkeep.
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Learning Outcomes

  1. Identify key steps in the home buying process
  2. Evaluate mortgage types and financing options
  3. Analyze property market trends and values
  4. Apply negotiation strategies for bidding
  5. Demonstrate knowledge of closing procedures
  6. Master post-purchase homeownership responsibilities

Cheat Sheet

  1. Understand the Home Buying Process - Embark on a treasure hunt through six epic stages: prepping, picking an agent, finding the perfect pad, securing your mortgage and sealing the deal. Mastering each checkpoint turns buyers into real estate champions. Explore the six-step journey
    2. nar.realtor
  2. Evaluate Mortgage Types - Whether you crave the steady rhythm of a fixed-rate mortgage or the thrill of an adjustable-rate's twists, understanding your options is key to a happy wallet. Comparing payment forecasts helps you pick the path that fuels your financial goals. Discover mortgage options
    3. Wells Fargo
  3. Analyze Property Market Trends - Surf the waves of local market data to spot hot neighborhoods and bargain gems. Tracking average prices and inventory levels gives you the inside scoop on the best time to dive in. Dive into market trends
    4. Investopedia
  4. Apply Negotiation Strategies - Arm yourself with ninja-level negotiation techniques to outwit counteroffers and land stellar deals. Knowing when to hold firm or offer a sweetener can be your secret weapon. Sharpen your negotiation skills
    5. Investopedia
  5. Understand Closing Procedures - The home stretch comes with a stack of disclosures, final walkthroughs and insurance sign-ups. Knowing what to expect at closing keeps awkward surprises off your doorstep. Close like a pro
    6. Wells Fargo
  6. Master Post-Purchase Responsibilities - Owning a home means budgeting for routine maintenance, garden quests and property taxes. Keeping your castle in tip-top shape keeps the magic alive and costs down the road low. Tackle home upkeep
    7. nar.realtor
  7. Assess Your Financial Readiness - Crunch your credit score, debt-to-income ratio and savings to see if you're mortgage-ready. Identifying weak spots early lets you power-up your finances before applying. Gauge your readiness
    8. nar.realtor
  8. Explore Homebuyer Assistance Programs - From down payment grants to low-interest loans, there's a treasure trove of programs for first-timers. Hunt down the ones with the best perks to make your dream home more affordable. Find buyer programs
    9. Wells Fargo
  9. Plan for Additional Costs - Beyond the sticker price, moving boxes, inspection fees and that fresh coat of paint spark joy - but add up fast. Budget for closing costs, packing adventures and creative upgrades to avoid money meltdowns. Prepare your budget
    10. nar.realtor
  10. Secure a Home Inspection - Don't let hidden leaks or wiring woes sabotage your sanctuary; book a pro inspection to flag any nasty surprises. Peace of mind is priceless and can save you from future repair nightmares. Book your inspection
    11. Investopedia
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