unit 3 real estate exam

What are common forms/trends of residential housing?

Cooperatives, apartment complexes, condominiums, PUDs, retirement communities, high-rises, converted-use properties, modular homes, mobile homes, time-shares, and traditional residential housing.

What are advantages of home ownership?

Financial security, pride of ownership, potential appreciation, and possible tax benefits.

What are disadvantages of home ownership?

Initial purchase costs, continuing expenses, maintenance, and financial risks.

What are common homeowner tax benefits?

Potential deductions for mortgage interest and property taxes, subject to applicable tax rules and limitations.

What is a principal residence?

The homeowner's primary or main home.

What is the traditional 2-out-of-5-year rule?

Under the traditional federal rule, a homeowner generally must have owned and occupied the home as their principal residence for at least 2 of the 5 years before the sale to qualify for the home-sale capital-gain exclusion.

What does homeowners insurance protect against?

Covered property losses and liability, depending on the policy.

What does a basic homeowners policy generally cover?

Fire, theft, and liability, subject to policy terms and exclusions.

What is a coinsurance clause?

A policy provision requiring the owner to maintain a specified percentage of insurance coverage relative to replacement cost.

What happens if the required coinsurance percentage is not met?

The homeowner may receive only partial compensation for a covered loss.

What is replacement cost?

The cost of replacing damaged property with similar property without deducting depreciation.

What is an SFHA?

A Special Flood Hazard Area identified as having significant flood risk.

When is flood insurance federally required?

For certain federally regulated or federally insured mortgage loans on properties located in SFHAs.