Retirement Planning

Question 1

Concept

is the current value of an asset (or stream of assets) that will be received in the future.

Answer 1

present value

Question 2

Concept

• is the process of reducing future values to present values

Answer 2

discounting

Question 3

Concept

This is a specific legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan

Answer 3

foreclosure

Question 4

Prior to foreclosure

the homeowner has three options

Answer 4

1. depart the property and try, for moral reason, to repay the lender the deficiency
2. declare bankruptcy
3. try to arrange a short sale

Question 5

Concept

is the time between when the homeowner has been notified by the lender that he or she is in default and the actual foreclosure has been completed

Answer 5

preforeclosure

Question 6

Concept

occurs when a home sale is negotiated with the owner at a price below the actual balance of the debt

Answer 6

private short sale

Question 7

Concept

the lender accepts less than the full mortgage amount and often forgives whatever debt is left unpaid—deficiency amount

Answer 7

lender short sale

Question 8

Concept

is the difference between the amount owed and what the lender collects at the short sale

Answer 8

deficiency amount

Question 9

Concept

• once the foreclosure process has been completed, the lender typically takes ownership of the property
• the lender may attempt to sell the property

Answer 9

foreclosure auction

Question 10

Pitfalls

buying foreclosed properties

Answer 10

• likely to need repairs
• taxes and other assessments may still be owed

Question 11

Concept

a key document required at the closing, which lists all of the costs and fees to be paid at the closing

Answer 11

uniform settlement statement

Question 12

People often do this while they save enough to make a down payment to purchase a home

Answer 12

rent housing for five years or more while they save

Question 13

Concept

Provisions of the Fair Credit Billing Act permit this whereby customers may dispute charges to their credit cards

Answer 13

chargeback

Question 14

Law

provides customers the ability to dispute charges on a credit card and request a chargeback

Answer 14

Fair Credit Billing Act

Question 15

Concept

notices that make insistent demands for repayment, or send negative information about your account to a credit bureau without stating that “some items are in dispute”

Answer 15

dunning letters

Question 16

limitations of the Fair Credit Billing Act

Answer 16

• time limits—within 60 days, also limits to within 100 miles of residence
• charge limits—must be above $50

Question 17

Concept

• serves higher risk applicants with low credit scores
• borrowers who are placed in this market are often happy to have obtained a loan at all

Answer 17

subprime market

Question 18

strategy for budgeting

unforeseen additional costs in purchasing a home

Answer 18

Estimating a 50 percent increase from what you are currently spending

Question 19

Complete the statement

Your financial success depends heavily on your ability to

Answer 19

make the sacrifices necessary to spend less than you earn

Question 20

Concept

describes an arrangement in which goods, services, or money is received in exchange for a promise to repay at a future date

Answer 20

credit

Question 21

Fill in the blank

When stated in dollars, interest makes up the ____

Answer 21

finance charge

Question 22

Concept

This is the total dollar amount paid to use credit (including interest and any other required charges such as a loan application fee)

Answer 22

finance charge

Question 23

Concept

is the valuation of an asset projected to the end of a particular time period in the future

Answer 23

future value

Question 24

Conocept

future value of a stream of payments

Answer 24

annuity