Chapter 4 Flashcards
The total dollar amount you pay to use credit.
finance charge
A home loan in which the sum of the monthly payments is not enough to repay the entire loan. A final payment comes due, which is a lump (large) sum of the remaining principal balance.
balloon mortgage
The cost of borrowing money on an annual basis. Takes into account the interest rate and other related fees on a loan.
Annual Percentage Rate (APR)
The process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract.
foreclose
The length of time you have to pay off a loan.
loan term
Credit line offered by mortgage lenders that allows a homeowner to borrow money against the equity in their home.
Home Equity Loan (HEL)
A decline in the value of property. The opposite of appreciation.
depreciation
A tool used to finance a purchase.
credit card
Money owed.
credit
A type of card used to make purchases. It often bears the seal of a major credit card company, and is issued by a bank. Unlike a credit card, the money comes directly out of a checking account. Also called a check card.
Debit card
A home loan in which the interest rate will change periodically (i.e. annually). Typically adjusted based on a published index such as the Treasury Bill or LIBOR. (This was brought on as a result of high interest rates in the early 1980s as a way for banks to transfer the risk of higher interest rates to the consumer.)
ARM Adjustable Rate Mortgage.
Information that has been passed on but is not true.
myth
An expense that a taxpayer is allowed to deduct from taxable income. For example, money paid as home mortgage interest and charitable donations can be deducted from your total income before calculating how much income tax you must pay the government.
tax deduction
Your belief system. The way you see or perceive things.
paradigm
A long-term rental agreement, and a form of secured long-term debt.
lease
