Personal Finance Fact Sheet 2
Used to collect real estate taxes from one's monthly mortgage
Escrow Account
If the interest rates and monthly mortgage payments do not change over the life of your mortgage
You have a fixed rate mortgage
A negative equity is a situation where homeowners owe more to the lenders than
what their property is worth
If your lender charges 1.5 mortgage points on a house selling for $100,000, on which there is a $90,000 loan, the points will cost you how much?
$1,350
John Anderson deposited $10,000 in a certificate of deposit(CD) for 5%, what will it be at maturity?
$12,400
A lender will usually require a loan-to-value ratio of what to avoid having to pay private mortgage insurance (PMI)
80% or less
Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. What is this plan?
A continuos whole life policy
A common provision in many term policies
A renewable clause
Employers often provide what as a fringe benefit for their employees ?
Group life insurance
The monthly interest on your adjustable-rate mortgage was $690. You paid $650 as your monthly payment on the loan leading to an increase in the principal balance. This is called an example of an
Negative Amortization
The most accurate method of determining the amount of life insurance coverage needed for an adult
The needs analysis method
The price of the car you are leasing is called the
capitalized cost
The primary purpose of life insurance is to provide financial security for dependents in the event of
death
A checking account is called a
demand deposit account
The basic purpose of insurance is to protect yourself from
economic losses
The majority of each monthly payment at the beginning of the loan goes to pay the
interest
The financing rate on a lease similar to the interest rate on a loan is called the
money factor
Fees charged by lenders as a condition of a mortgage loan that raises the effective rate of interest are called
mortgage points
The more frequently a bank compounds interest
the higher the effective rate for a given nominal rate will be
From the standpoint of a person buying insurance, the central purpose of insurance should be to
transfer the risk of serious losses