More Personal Finance

Unit pricing

Unit pricing uses a standard unit of measurement to compare the prices of packages of different sizes

Open end credit

loans are made on a continuous basis and you are billed periodically for at least partial payment

Escrow

money, usually deposited with the lending financial institution, for the payment of property taxes and homeowner's insurance

PMI

(PMI) Private mortgage Insurance is usually required if the down payment is less than 20 percent. This protects the lender from financial loss due to default

FICO Scores

300-500 toxic risk, 500-559 worst, 559-720 moderate, 720-850 best

five (5) components that make up your credit score and what percentage

5 components of credit score and the percentages. 1) pay on time 35%, 2) Debt to credit limit ratio 30%, 3) Credit history 15% 4) New credit 10%, 5) Credit mix 10%

Least/Most Expensive

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Lease

A legal document that defines the conditions of a rental agreement

Benefit of Home Equity Loan

A second mortgage, more commonly called a home equity loan, allows a homeowner to borrow on the paid-up value of the property

Interest Only Mortgage

Allows a homebuyer to have lower payments for the first few years of the loan. During that time, none of the mortgage payment goes toward the loan amount. Once the initial period ends, the mortgage adjusts to be interest only at the new payment rate

Express Warranty

An express warranty is usually in written form and is created by the seller or manufacturer and has 2 forms: the full warranty and the limited warranty

Implied Warranty

An implied warranty covers a product's intended use or other basic understandings that are not in writing

Sticker Price

An important new-car price information source is the sticker price label, printed on the vehicle with the suggested retail price

Condominium

An individually owned housing unit in a building with several such units

APR

Annual Percentage Rate

What to consider when evaluating a home

Buy or rent, Life styles, Types of housing, Location, Location is the most important!!!

5 "C" of Credit

Character, Capacity, Capital, Collateral, Conditions

Operating Cost of vehicles (fixed)

Depreciation Interest on auto loan Insurance License, registration, taxes, and fees

Operating Cost of vehicles (variable)

Gasoline and oil Tires Maintenance and repairs Parking and tolls

Chapter 7 bankruptcy

In a Chapter 7 bankruptcy, an individual is required to draw up a petition listing his or her assets and liabilities

Debt payment-to-income ratio

Monthly Debt payments (not including house payments - long-term) / net monthly income; should be no more than 20%

Legal Aid Society

One of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney

Points

Prepaid interest charged by the lender

Mediation

The attempt by an impartial third party to resolve a difference between 2 parties through discussion and negotiation

Invoice Price

The dealer's cost, or invoice price, is an amount less than the sticker price

Arbitration

The settlement of a difference by a third party whose decision is legally binding

Down payment

a partial payment made at the time of purchase

Earnest Money

a portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer

Borrower

cardholders who do not pay off their balances every month

Convenience User

cardholders who pay off their balances in full each month.

How bankruptcy affects credit score

obtaining credit may be easier for people who file a Chapter 13 bankruptcy and repay some of their debts than for those who file a Chapter 7 bankruptcy and make no effort to pay any of their debts

Reasons for Borrowing

short term adjustments of financing large and public works, unanticipated emergencies, deliberate spending by the federal government to stimulate the economy

Closed end credit

you pay back one-time loans in a specified period of time and in payments of equal amounts

ARM

○ Adjustable rate mortgage (ARM) § The rate will adjust over the length of the mortgage § The interest rates can increase or decrease over the life of the loan § There are rate and payment caps put into this

Balloon Payment

○ Balloon mortgage § Smaller fixed payments § You will have a large payment at the end

Disadvantages of Renting

○ Disadvantages § Few financial benefits □ No building equity □ Tax deductions would be better in a house § Restricted life style □ Pets □ Decorating □ Noises § Legal details are many □ You have to sign a lees □ Security deposite ® = one or 2 month rent ® They hold that money to fix any problems you create

Advantages of Renting

○ Renting advantages § Ease of mobility § Fewer responsibilities □ Financial and lifestyle □ Landlord will take care of all problems § Lower initial costs