Review Sheet Flashcards
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
luyfgljb
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?
jhfhkd
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
What accounts are most useful for maintaining liquid assets?
Any cash you have Funds in your checking account Funds in your savings account Funds in a money market account Certificates of Deposit Mutual Funds Stocks Bonds
Where does the government and state get most of their funds?
Federal- income tax
State- income and sales tax
Local- property tax
What class taxpayer pays the highest taxes?
middle class
What controls does the government use to control the financial planning environment?
,jg.kdshf.ksfdksfj
How do itemized deductions work?
An itemized deduction is an eligible expense that individual taxpayers in the United States can report on their federal income tax returns in order to decrease their taxable income
How do standard deductions work?
The standard deduction, as defined under United States tax law, is a dollar amount that non-itemizers may subtract from their income and is based upon filing status.
What is the difference between itemized and standard?
Standard deduction is a specific dollar amount that you can deduct from your income to reduce your taxable income
Itemized deductions, on the other hand, are expenses which one can list if these expenses belong to a predetermined list of allowable items.
Where can one get advice for preparing their tax return?
fluyglgl
How does the social security system work?
The program is based on contributions that workers make into the system. While you’re employed, you pay into Social Security; you receive benefits later on, when it’s your turn to retire. Contributions take the form of the Federal Insurance Contributions Act (FICA) taxes that are withheld from most paychecks.
What is a budget?
Simply put, a budget is an itemized summary of likely income and expenses for a given period
Whats the reasoning behind having a budget?
It’s an invaluable tool to help you prioritize your spending and manage your money—no matter how much or how little you have.
How is a budget prepared?
Typically it is prepared through a spreadsheet and you have to take into account your income, bills, and regular expenses. From there, you can determine how much spending money you have and how much you can budget
What are the 3 basic financial planning documents used by individuals and families?
Short term goals
long term goals
spending history
What is a measure of satisfaction that one gets from spending money?
utility
What does propensity mean?
an inclination or natural tendency to behave in a particular way.
How is propensity used in financial planning?
Generally, as income rises, the average propensity to consume decreases
