Chapter 6, 7, 8, 9 personal finance
refinance
finance (something) again, typically with a new loan at a lower rate of interest
capacity
financial ability to meet credit obligations
300-850
generally, what are credit scores between
Veterans Administration (VA loans)
government financing program for service veterans only; no down payment; rate based on your credit score
Federal Housing Authority (FHA)
government financing program that gives a loan for low to middle income family; lower down payment; slightly higher rates due to increase risk; and fee for insurance
warranty of merchantability
guarantees that the product is fit for the ordinary uses for which it is intended
10, 15, 20, 25, 30 yrs or whatever years you want
how long is a mortgage
20%
how much do banks want for a downpayment?
warranty of title
indicates that the seller has the right to sell the product
good faith estimate sheet
is a document that includes the breakdown of approximate payments due upon the closing of a mortgage loan
reverse mortgage loans
is a type of home loan for older homeowners that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance.
amortization
is paying off an amount owed over time by making planned, incremental payments of principal and interes
appraisal
lender will require an __________ of the property to determine fair market value
larger
the ______________ the downpayment, the easier it is to get a mortgage
any additional fees charged by the lender
the annual percentage rate adds ________
-made it more difficult for people to file for bankruptcy -people must wait 8 years between bankruptcies -those who can pay must pay part of their debt back
the bankruptcy abuse prevention and consumer protection act of 2005 made...
contingency clause
this contract condition(s) states that the agreement is binding only if certain events occur
all applicants start off on the same footing and you cannot discriminate against race, color, age, sex, or marital status
what is the equal credit opportunity act?
location
what is the most important factor in selecting a home
1. help families with serious debt problems get out of debt 2. teach people money management skills to stay out of debt
what is the purpose of CCCS
present you offer to the seller negotiating a settlement price assisting you in getting financing representing you at closing
what is the purpose of a real estate agent?
-notify the creditor in WRITING within 60 days of the euro and the creditor MUST acknowledge your letter within 30 days
what must you do if there is a billing error
walk through, closing, closing cost, good faith estimate sheet
what occurs during the closing of a house?
Your employer, position, income Former address Former employer Spouse's name, SS #, income If you rent or own your home Returned checks More
whats in your file for credit bureaus
finance companies, retailers, credit cards, payday loans,
where do you get expensive loans?
from family members
where do you get inexpensive loans?
from banks, credit unions, and others
where do you get medium priced loans?
1) lock you rate for 30-60-90 days 2) you may float your rate
with interest rates at time of application you can either 1) 2)
character
your attitude towards credit obligations
higher
APR is always (lower or higher) than the interest rate
20%
Loan should not exceed _____
false: consumer credit does NOT include a home (purchase) mortgage
T or F: Consumer credit includes a home (purchase) mortgage
Most information is 7 years Personal Bankruptcy 10 years Unless applying for credit $75,000 or greater or for life Insurance of $150,000 or more.
What are the limits on adverse Data
you will be required to purchase private mortgage insurance (PMI)
What happens if the downpayment is less than 20%?
principal x rate of interest x time
What is the interest rate formula
amortization
a conventional mortgage allows for the _____________ of the loan
consumer credit counseling services
a local non-profit organization affiliated with the national foundation for consumer credit
short sale
a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property
warranty
a written guarantee from the manufacturer or distributor that specifies the conditions under which the product can be returned, replaced, or repaired
Chapter 13 bankruptcy
also known as Wage-Earners Plan; propose a plan to the bankruptcy court for paying off your debts over a period of time and make regular payments to the ? trustee who pays your bills; may keep all of your property
collateral
an asset that you pledge to a financial institution to obtain a loan
negative amortization
deferred interest or graduated payment mortgage) occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases
credit
defined as an arrangement to receive cash, goods, or services now and pay for them in the future; "obligating future earnings"
deed
document that transfer ownership form one party to another
1%
each discount point is equal to _____ of the loan amount
added cost later
what happens when you lowball when buying a vehicle
long term loan for a piece of property
what is a mortgage?
open line of credit where you charge, repay, charge again; extended to ac certain $$ limit
what is open end credit?
Grace Period or Float period
what is the biggest advantage of credit
truth in lending law 1969
Creditors are required, by law, to state the cost of borrowing as a dollar amount so that consumers would know exactly what the credit charges will be. -done with the Annual Percentage Rate or the APR.
title insurance
Defines the boundaries for the property and conducts a search to make sure the property is free of claims.
appraisal
conducting a home inspection is not a(n) ________________ (vice versus)
limited warranty
covers only certain aspects of the product such as arts or requires the buyer to incur part of th costs for shipping or repairs
death, disability, or loss of property
credit insurance ensures the repayment of you loan in the event of _______, __________, or ________
consumer credit
credit used for personal needs
mortgage
monthly debt payments do not include ________
chapter 7 bankruptcy
most debts are forgiven, most assets are sold to pay off creditors, and certain assets are protected
provides protection meaning it assures quality
new car warranties provide ____________ meaning it __________ __________
time, mileage & parts
new car warranties vary in ________, _________, & ____________
sub prime
people with bad credit receive a __________ for mortgage loans & terms
points
prepaid interest charged by the lender
fair debt collections practices act
prohibits certain practices by agencies that collect debts for creditors but does not apply to creditors who collect debt themselves
title insurance
protects the owner and lender against financial loss resulting from future defects in the title and unforeseen claims.
1 or 2 points 5 points
rates for ARM are usually _____________ points a year with a max of _______ points over the life of the loan
conditions
refers to the general economic conditions that can affect your ability to repay the loan
capital
refers to your assets or net worth
homeowners protection act
requires that a PMI policy be terminated automatically when a homeowner's equity reaches 22% of the property value at the time the mortgage was executed
zoning laws
restrictions on how the property in an area can be used
rate cap
restricts the amount by which the interest rate can increase or decrease during the ARM (adjustable rate mortgage) term
warranty deed
seller guarantees the title is good
extended warranties
service contracts are also referred to as ______________ ______________
closing cost
settlement cost
full warranty
states that a defective product can be fixed or replaced during a reasonable amount of time
expressed warranty
usually in written form created by the seller or manufacturer and has two forms: the full warranty and the limited warranty
Emotional Problems The Use of Money to Punish The Expectation of Instant Comfort Keeping up with the Jones Overindulgence of Children Misunderstanding or Lack of Communication among Family Members The Amount of Finance Charges
what are some debt problems
underwriting fees document preparation fees loan processing fees
what are some examples of annual percentage rate fees
1. experian information solutions 2. transunion credit union information company 3. equifax services, Inc.
what are the 3 credit bureaus
sellers agent buyers agent dual agent listing agent
what are the 4 types of agents
character capacity capital collateral conditions
what are the 5 C's of credit management?
enjoy goods and services now do not have to carry cash points, rebates, sky miles, etc. may extend a manufacturer warranty or provide some insurance or roadside service
what are the advantages of credit
fixed period of time fixed interest rate fixed payment
what are the common features of closed end creditterm-8
overspending and credit cost money
what are the disadvantages of credit?
problem identification information gathering evaluating alternatives selecting vehicle options determining a purchase price car price negotiations/barganning
what are the phases for buying a vehicle?
fixed rate, fixed payment and fixed period of time
what are the three common characteristics of a mortgage
installment sales credit installment cash credit single lump sum credit
what are the three most common types of closed end credit?
credit life, credit accident & health, and credit property
what are the three types of credit insurance?
lowballing highballing
what are the two sales techniques to beware?
closed end credit and open end credit
what are the two types of credit
smart cards, debit cards, gift cards, Travel & entertainment cards, smart phones, home equity loans, line of credit or second mortgage
what are types of credit
impulse buying timing of purchases cooperative purchasing brands--store vs. national brands open dating uniting pricing
what are wise purchasing strategies?
Social Security payments Unemployment payments Limited equity in your home, car, truck, household goods, trade tools, books, etc. are protected
what assets of protected under the chapter 7 bankruptcy?
have a loan institution prequalify you
what can you ask to help you determine how much you can afford to spend on a home?
-sets procedures for correcting billing mistakes -refusing to make payments for defective goods -promptly crediting your payments
what did the Fair credit billing act (FCBA) in 1975 do
APR, fees, and disclosures
what did the credit card Act of 2009 affect
sticker price, invoice price, set price dealers (take it or leave it) and car buying services
what do you price bargain for new cars?
shows good faith with the contract
what does earnest money show?
-regulates the use of credit reports -requires the deletion of obsolete information -gives consumers access to their files -right to have erroneous data corrected
what does the fair credit reporting act do?
sticker in the window shield that either has a warranty, "sold as is," or "buyer beware"
what does used car warranties have?
-credit is destroyed -may be difficult to find employment -cost of bankruptcy (court cost, attorney's fees, trustee's fees & cost)
what happens when you file for bankruptcy
high amount trade-in and higher new car price
what happens when you highball when buying a vehicle
