Personal Finance Chapter 5 and 6

A payment made using a(n) _____ is equivalent to paying by cash.

Debit Card

James finds it difficult to manage credit but wants the convenience of using a credit card. He wants to get a card that will provide direct access to his checking account. James should get a:

Debit Card

Paying a loan on schedule is one way to build a good credit history.

True

Prequalification provides a home buyer with information regarding the specific mortgage amounts he or she is eligible for subject to the expected changes in interest rates.

True

If the maximum loan-to-value ratio that a lender will accept on a house costing $100,000 is 80%, then the borrower must make a down payment of at least:

$20,000

The purchase price of the house you are buying is $140,000. A loan-to-value ratio of 80% will require a down payment of:

$28,000

_____ are the credit cards issued in conjunction with a sponsoring group—most commonly some type of charitable, political, or professional organization.

Affinity Cards

At the end of your car lease period, you intend to turn in the car, and you will not pay extra at that time based on the residual value of the car. You have a(n) _____ lease.

Closed-End

_____ are the expenses that borrowers pay during the final step of a real estate purchase.

Closing Costs

If the interest rate and monthly mortgage payment do not change over the life of your mortgage, you have a(n):

Fixed-Rate Mortgage

The majority of each monthly payment at the beginning of the loan goes to pay the:

Interest

A(n) _____ ratio specifies the maximum percentage of the value of a property that a lender is willing to loan.

Loan- to- Value

_____ is a situation where homeowners owe more to the lenders than what their properties are worth.

Negative Equity

A frequent flyer card can be aptly classified as a(n):

Reward Card

A Chapter 7 bankruptcy filing would result in the discharge of most of your debts.

True

A credit card application requests information that is routinely used to predict creditworthiness.

True

Credit scoring systems are often used by lenders to determine applicants' creditworthiness.

True

Lenders use the guideline that a borrower's monthly repayment burden should not be more than 20% of the borrower's take-home income.

True

If a borrower has a high FICO score, then there is:

a high chance of his or her loan getting approved.

A foreclosure happens when:

the lenders attempt to recover loan balances from the insolvent borrowers by forcing the sale of the home pledged as collateral