Review Sheet Flashcards
(40 cards)
Home Equity Loans
involves a set amount of money loaned over a set amount of time up to as long as 15 years
guy wants to buy boat so he takes loan out and secures it with a second mortgage on home
Do borrowers get tax deductibility with home equity loan?
yes
What is simple interest?
interest that is paid only on the initial amount of the deposit
What is discounted interest?
when interest is computed and then subtracted from the principal with the remainder being disbursed to the borrower
What is add-on interest?
calculating interest by computing finance charges on the original loan balance and then adding the interest to that balance
Consumer debt ratio
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Consumer loans?
loans made for a specific purpose using formally negotiated contracts that specify the borrowing terms and repayment
Types of consumer loans
auto loans, loans for durable goods, education loans, personal loans, consolidation loans
Options for have debt?
bankruptcy, debt consolidation, debt settlement,
different types of cards?
credit, debit, charge, prepaid, store card, credit builder cards
What are the 5 C’s of credit
Character- borrowers reputation
- Capacity - borrower’s ability to repay a loan by comparing income against recurring debts
- Capital - The lender will consider any capital the borrower puts toward a potential investment
- Collateral - helps to secure the loan
- Conditions - the interest rate and amount of principal
Adjustable rate mortgages?
a mortgage whose rate of interest is adjusted periodically to reflect market conditions.
Fixed Rate mortgages?
A fixed-rate mortgage (FRM), often referred to as a “vanilla wafer” mortgage loan, is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float”.
Other types of mortgages?
fixed-rate mortgages Adjustable rate mortgages interest only mortgages graduated payment mortgages growing equity mortgages biweekly mortgages
how do lenders increase the yield of their loans?
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Requirements to “dip” into IRA account?
It applies to your very first home purchase, of course, but it also applies if you or your spouse haven’t owned a principal residence at any time during the past two years. The operating word here is ‘principal’, because even if you’ve owned a vacation home during that time, the exemption can still apply.
Also, you yourself don’t have to be the homebuyer. You can also qualify for the exemption if you’re helping your spouse, child, grandchild or parent buy a home.
What is a condominium?
a building or complex of buildings containing a number of individually owned apartments or houses.
What is a cooperative?
Co-ops are not considered real property. When you buy into a co-op, you become a shareholder in a corporation that owns the property.
What is a single family home?
A single-family detached home, also called a single-detached dwelling, single-family residence (SFR) or separate house is a free-standing residential building. It is defined in opposition to a multi-family residential dwelling.
What are the ongoing costs of owning a home?
property insurance
Maintenance
Property taxes
interest opportunity costs
What to look for in a rental agreement?
Is it a fixed-term or month-to-month tenancy? rent fees deposits pets features water/waste
Advantages of buying a new car
Reduced maintenance expense
Warranty coverage
Roadside assistance
Advantages of buying a used car
Improved reliability
less expensive
What are liquid assets?
An asset is said to be liquid if it is easy to sell or convert into cash without any loss in its value