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