FNCE 2820
Ratio Analysis
-liquidity funds -housing debt payment ratio -consumer debt payment ratio -total debt payment ratio -savings ratio
financial intermediaries
depositories non-depositories investment intermediaries government agencies
car buying process
do your homework (ex. KBB) comparison shopping negotiate deal buy decision
liquidity funds ratio
3-6 months of emergency funds short term assets / monthly non-discretionary expenses
FICO Credit Score
350-850 Higher score = less risk Calculated from: payment history (35%) amount of debt (30%) length of credit history (15%) new credit (10%) type of credit (10%)
total debt payment ratio
36-38% of gross pay
savings ratio
5-10% of gross income total savings / gross income
depository accounts
checking account NOW account savings account money market deposit account
types of consumer revolving credit
credit cards store charge cards overdraft protection bank line of credit home equity line of credit
Liabilities
current liabilities, long-term debt
Shortly after graduation, you begin your first job. (Congratulations!) You are proud of the fact that you negotiated a starting salary of $54,000, which calculates to $1,038 per week. When you receive your first paycheck, you realize that your take-home pay is significantly less than that. Why is that the case?
$1,038 is the gross weekly salary; however, money will be withheld for Federal and state income taxes, FICA and unemployment insurance. Each of these items will be itemized on Form W-2. also withholdings for FICA and FUTA, plus any deferrals that you make to your 401(k) retirement plan
Pieces of the Financial Planning Puzzle
-cash management -debt management -planning for educational needs -insurance and risk management -income tax strategy -retirement planning -investments -estate planning
home buying process
-do your homework (remember online calculators for budget and type of home you want+can afford) -search for your home (look for properties. fair resale price. appreciation potential) -negotiate the deal -obtain mortgage -closing and moving in
Home lease
-financial terms (monthly payment, security deposit, damage deposit, late penalties) -terms of the lease -responsibilities (utilities, landscaping, repairs) -restrictions (pet restrictions, maximum occupants, sub-leasing) -eviction process -move out (notice, inspection, return deposits)
How do you negotiate the deal?
-knowledge of fair price -know dealer prices -ability to walk away -never make that decision under duress
types of subsidized student loans
perkins stafford PLUS
housing debt payment ratio
≤28% of gross income (more if housing is more expensive) housing liabilities / gross income
"above the line" deductions
-qualified student loan interest (subject to limit) -IRA contributions (pre-tax contribution, subject to limit) -early withdrawal penalties (CDs) -health savings account -self-employed health insurance (includes self, spouse, dependents, etc.) -self-employed retirement account (50% FICA, retirement plans)
Tax reduction strategies
-reduce reportable income -increase above-the-line adjustments -increase below-the-line adjustments -utilize tax credits
Strategic Planning Process
-understand your situation -identify your goals and priorities analyze current plan -synthesize updated plan -implement plan -monitor and adapt
Car leasing
-used for business or wanting new car, if you don't think you'll exceed either mileage or lease term cost of using vehicle/ # of payment periods Includes security deposit and monthly payments. additional fees: acquisition fee, disposition fee (to prepare for resale), early termination fee
Stages of Life Cycle
1. Accumulation 2. Consolidation 3. Spending and Gifting
Principles of Personal Finance
1. Knowledge of Personal Finance 2. Focus on Cash Flow (discipline, tax minimization, liquidity) 3. Value in Creating Financial Plan (financial and risk management process) 4. Healthy Behavior (taking action, avoid, self-sabotage)
Real Estate Closing
1. Open ESCROW (title or escrow company). Should hold earnest money and transaction documents. 2. Title search. Search title insurance. (Make sure there are no liens. You should own the whole house. 3. Mortgage approval Lender conducts home assessment. Rate is locked, if not done already. 4. Estimated closing cost disclosure 5. Buyer's house inspection (DO NOT SKIP. Get certified home inspector.) 6. Request for repairs (right to cancel based on inspection. Last place to cancel.) 7. Confirmation of repairs and or contingency removal 8. Final closing cost statement 9. Fund escrow (full amount due) 10. Final walkthrough (IMPORTANT) 11. Sign final papers
4 strategies for managing student loan debt
1. debt consolidation (consolidate subsidized and unsubsidized separately. can change repayment schedule) 2. change repayment schedule (must requalify for certain levels) 3. forbearance or deferral (timeouts, to put them on load for a short period of time) 4. loan forgiveness
Budgeting process
1. estimate income 2. set realistic surplus goal 3. evaluate expected spending needs 4. draft and fine-tune spending and savings plan 5. monitor spending 6. assess variances 7. adapt
What did you learn about negotiating the deal?
1. property listing should be fair 2. buyer offer 3. seller response 4. ongoing negotiation 5. mutual acceptance or withdrawal of offer
consumer debt payment ratio
10-20% of take-home pay total consumer debt PAYMENTS / net income
How does a "line of credit" work? In responding to this question, offer an example to clarify your explanation.
A line of credit is an amount of money that is available to you at a pre-arranged interest rate for a period of time. In securing the line of credit, you will generally be assessed an upfront fee. No interest is assessed on the line of credit until you withdraw the money. Repayment of the loan is quite flexible during the draw period; however, at some point (e.g., 10 years) the draw period ends and the repayment period begins. During the repayment period, there are fixed, amortized payments. Remember that the bank line of credit is a hybrid between revolving and installment credit. After the initial draw period, the loan becomes fully amortized.
Why should you avoid defaulting on your student loans?
A loan becomes delinquent after a payment is missed, and reported to credit bureaus after 90 days. Official default occurs after 270 days of no payments. -the interest continues to accrue -consolidation and repayment options are lost -no new federal loans will be issued -wages may be garnished -up to 15% of Social Security benefits garnished -Government may deduct 25% of each payment as a collection fee -negative impact on credit score -job searches negatively impacted
Assuming that the following tax rate schedule applies, what is your tax liability given ordinary taxable income of $96,400? 10% ($0-$9,875) 12% ($9,875-$40,125) 22% ($40,125-$85,525) 24% ($85,525-$163,300) 32% ($163,300-$207,350 35% ($207,350-$518,400) 37% (over $518,400)
Answer: $17,215.50 The tax liability is calculated using the progressive rate schedule. In this example, the first $9,875 of taxable income is taxed at 10%. The next $30,250 ($40,125 - 9,875) of taxable income is taxed at 12%, the next $45,400 ($85,525 - 40,125) is taxed at 22% and the remaining amount of $10,875 ($96,400 - 85,525) is taxed at 24%. The tax liability equals $17,215.50 (987.50 + 3,630 + 9,988 + 2,610).
What is the net worth given the following information? Bank account = $500 Credit card balance = $360 Investment account = $2,600 Fair market value of used car = $3,400 School loan = $3,500 Store charge account balance = $250
Answer: $2,390 Net worth is equal to total assets less total liabilities. In this question, the assets include the bank account, the investment account and the fair market vale of the used car. The liabilities include the credit card balance, the school loan and the store charge account balance. The calculation follows: 500 + 2,600 + 3,400 - 360 - 3,500 - 250 = 2,390.
Which of the following is considered earned income (i.e., active income)? (1) Salary from your job (2) Sale of your used car that represents a gain of $100 (3) Sick pay (4) Sale of a limited partnership (5) Commission received from selling product (6) Membership to 24/7 fitness, which is paid by your employer (7) Gift from your parents
Answer: 1, 3, 5 and 6 Earned income includes wages, salaries, tips, bonuses, self-employment income, severance pay, sick pay, disability income, gambling winnings, unemployment income, jury duty pay, distributions from retirement plans (which represent pre-tax contributions and tax-deferred earnings), loan forgiveness, and certain employer fringe benefits. The sale of a used car is a capital gain. The sale of the limited partnership would be a capital gain or loss of a passive investment. The gift from your parents is excluded from gross income.
Expenses can be categorized as fixed, variable-fixed and discretionary. Which of the following is a discretionary expense? (1) monthly rental payment (2) electric and water bills (3) travel expenses (4) monthly auto loan payment (5) entertainment expenses (6) income tax payment (7) vacation costs
Answer: 3, 5 and 7 Examples of discretionary expenses include vacations, entertainment, capital expenditure (e.g., new car, home remodel) and gifts.
What is the correct order of activities in the yearly budgeting process? (1) evaluate your spending needs (2) monitor your actual spending (3) estimate your income for the year (4) reflect on budget variances (5) decide on a reasonable cash-surplus goal (6) adapt your spending and savings plan for the next year (7) create your spending and saving plan
Answer: 3, 5, 1, 7, 2, 4 and 6 The first two steps in the budgeting process involves projecting your income in the next period and then establishing a realistic surplus (savings) goal. The next step is to evaluate your spending needs and to assess which spending wants are important. With that frame, you will create your budget. In implementing the budget, you will monitor your actual spending and reflect on the planned spending versus actual spending. The final step is to re-evaluate the budget and adapt it for the next year.
What is your friend's emergency fund multiple (ratio) based on the following data: Monthly gross income = $5,4000 Monthly fixed expenses = $2,200 Monthly variable-fixed expenses = $800 Monthly discretionary expenses = $600 Short-term assets = $11,400 Long-term assets = $64,500 Net worth = $51,600
Answer: 3.8 months The emergency fund ratio reveals how many months of necessary living expenses could be covered with liquid assets, given disruption in cash flow. In this problem, liquid assets (short-term assets) is equal to $11,400. The necessary living expenses include all expenses except for discretionary cash flows. The discretionary spending can be delayed until cash flows are resumed. $11,400 / (2,200 + 800) = 3.8 months
Which of the following budgeting variances would be considered positive in respect to increasing the cash flow surplus? Budgeted spending on entertainment of $2,500 but actual spending of $3,500 Budgeted spending on restaurants of $800 but actual spending of $1,100 Budgeting spending for rent of $8,000 but actual spending of $8,000 Budgeted income for employment of $55,000 but actual income of $58,000
Answer: Budgeted income for employment of $55,000 but actual income of $58,000 Each of the other responses indicated higher spending than planned, which will negatively impact the cash flow surplus.
All but one of the following deductions are permitted against gross income. Which of the following is NOT an above-the-line adjustment for Form 1040? Qualified student loan interest (subject to cap) Contributions to a health savings account (subject to limits) Charitable contributions (subject to limits) Contributions to a pre-tax individual retirement arrangement (IRA), subject to limits
Answer: Charitable contributions (subject to limits) Charitable contributions are a below-the-line deduction, not an above-the-line adjustment. Above-the-line adjustments include IRA contributions, health saving account contributions, contributions to a self-employment retirement plan, premiums for health insurance when self-employed, early withdrawal penalties of financial securities and qualified student loan interest.
An asset is financial, real or personal property that you own or control, while a liability is a debt obligation. Which of the following would be listed as a liability on your Statement of Net Worth? Current value of your investment account Fair market value of your home Fair market value of your rental property Current balance on your credit cards Face value of life insurance policy
Answer: Current balance on your credit cards Examples of liabilities include credit card balances, balance of school debt, store credit balances, and balance of any personal loans.
Which of the following statements accurately describe FICA withholdings? FICA withholdings are used to pay your income tax liability FICA withholdings are used to pay for your health care benefits FICA withholdings are used to pay for your future Social Security and Medicare benefits FICA withholdings are used to fund your employer retirement plan
Answer: FICA withholdings are used to pay for your future Social Security and Medicare benefits
Which of the following statements regarding tax filing requirements is INCORRECT? Failure to make timely tax payments will result a penalty (interest due) A Federal tax return (Form 1040) needs to be filed, if gross income exceeds the standard deduction. If an extension is requested, then no payment is required until the final filing, which is due in October. If filing is necessary, then the tax form needs to be mailed (post-marked or electronically submitted) by April 15th or an extension needs to be filed by that date
Answer: If an extension is requested, then no payment is required until the final filing Estimated tax payment needs to be submitted with any extension request. If not, then a penalty will apply.
credit cards (things to keep in mind)
card fees characteristics annual percentage rates types of credit cards credit limits repayment and grace periods balances
The IRS categorizes income as either earned income, portfolio income or passive income. Which of the following would be considered as portfolio income? Bonus from employment Income received from a partnership in which you are a limited partner W-2 wages Interest on your bank account Scholarship
Answer: Interest on your bank account Portfolio income includes dividends (from stocks, mutual funds, etc.), interest (from bank accounts, etc.), royalties from investment property, net rent from property that you manage, annuity income and gains on the sale of property, investment securities and business interests.
The CFP Board suggests a maximum housing ratio of 28%. Which of the following statements best describe the following situation? Jack's gross income for the year = $84,000 Monthly mortgage and interest payment = $1,500 Annual premium for homeowner's insurance = $1,800 Annual property tax = $4,600
Answer: Jack's housing ratio is above the recommended 28% benchmark The housing ratio is calculated by dividing the total cost of housing (principal, interest, property taxes and homeowner's insurance) by gross income. In answering this question, you need to make sure that all of the items are stated as monthly or yearly data. Since you are given three annual data points, it is easiest to multiple the monthly mortgage payment by 12. Housing costs = (12 x 1,500) + 1,800 + 4,600 = 24,400 Gross income = 90,000 Housing ratio = 24,400 / 84,000 = 29.1%
When you start employment within the US, you will be required to fill out Form W4, which informs the employer about income tax withholdings. Assuming that each of the following individuals earns the same salary, which one will have the largest amount withheld from the take-home pay? Sally claims two allowances Lucy claims four allowances Joe claims one allowance Jake claims three allowances
Answer: Joe claims one allowance The lower the number of allowances claims, then the more money that is taken out to pre-pay income taxes. The higher the number of allowances claimed, then the less money that is taken out to pre-pay taxes.
Financial institutions facilitate the flow of funds between borrowers and lenders. They include banks, savings and loans, credit unions, investment companies and insurance companies. Which of the following statements about the various institutions is INCORRECT? Mutual fund insurance is designed to provide investors with protection up to $500,000 in the event that the stock market declines in value National credit union insurance fund is designed to provide credit union depositors with protection up to $250,000, in the event of credit union insolvency SIPC insurance is designed to provide brokerage account holders with protection up to $500,000 in the event of dealer-broker bankruptcy. FDIC insurance is designed to provide bank depositors with protection up to $250,000 in the event of bank insolvency.
Answer: Mutual fund insurance is designed to provide investors with protection up to $500,000 in the event that the stock market declines in value. There is no insurance fund designed to make an investor whole due to a market decline. Even SIPC insurance would not cover loses due to market volatility. Rather, FDIC, SIPC and NCUIF insurance is designed to promote investor/depositor confidence in the financial stability of financial intermediaries (e.g., banks, credit unions, savings and loans and broker-dealers).
Which of the following would be taxed as a long-term capital gain, rather than as ordinary income or a short-term capital gain? Distribution from an employer retirement plan Sale of a mutual fund that you owned for six months and one day Sale of a stock that you owned for one year and one day Dividends from a mutual fund that you owned for five years Disability benefit received from an employer's insurance plan
Answer: Sale of a stock that you owned for one year and one day Capital gains apply to the sale of capital assets, including securities, a home, car, business interest or personal property. Any sale that occurs after a holding period of one year plus one day is considered long-term. Any sale that occurs one year from purchase or shorter is taxed at the short-term capital gain rate. Note that dividends and interest from securities is considered ordinary income, not a capital gain.
According to the lecture, which of the following was NOT identified as one of the "Big Three" tax planning strategies? Purchase a home Contribute to tax-advantage retirement plans Start a small business Turn down a bonus to lower gross income
Answer: Turn down a bonus to lower gross income Congress provides tax incentives to promote social objectives. The three strategies align with these social objectives - start a business, contribute to retirement plans and home ownership.
All but one of the following employer benefits are tax-free. Which of the following employer benefits would be taxed as gross income? Employer contributions to your employer-sponsored qualified retirement plan Education assistance (capped at $5,250 per year) Use of the company car and ski lodge for a family vacation Health insurance premiums paid by the employer
Answer: Use of the company car and ski lodge for a family vacation Employer benefits that are not considered gross income include health and disability insurance premium payments, group term life insurance premiums (subject to $50,000 benefit cap), contributions to the employee's qualified retirement plan, qualified employer discounts, educational assistance for qualified expenses (subject to annual $5,250 cap), de minimums expenses, onsite athlete facilities and meals and lodging for the benefit of the employer. Taxable benefits include private use of the company car or properties, membership to off-site health facilities or country clubs, and tickets to sporting events or presentations.
Your accountant calculates that your Federal tax liability is $2,000. If you are able to claim a refundable tax credit valued at $2,500, then which of the following best describes the situation? You will be entitled to a $500 refund Your tax liability will be $4,500 Your tax liability will be $0 You will need to carryforward the $2,500 credit until next year
Answer: You will be entitled to a $500 refund Tax credits offer a dollar-for-dollar write-off against this year's taxes. Since the tax credit is refundable, you would be entitled to a $500 refund. If it happened to be a non-refundable tax credit, then you could reduce this year's taxes to zero but no more. The personal tax credit can only be used in the current tax year; it cannot be carried forward.
types of liquid assets
cash depository accounts liquid securities brokerage accounts
Liquid assets earn low rates of interest, as compared to capital assets. Which of the following liquid asset accounts would typically earn the lowest interest rate? bank checking account bank certificate of deposit bank savings account bank money market deposit account
Answer: bank checking account Bank accounts are intended to facilitate financial transactions, including paying bills and withdrawing money on demand. Because the assets are considered very short-term in nature, the interest earned is quite low. In general, the more frequent the expected transaction, the lower the interest earned. As discussed in class, the checking account is designed to provide unlimited withdraws, so interest is quite low (if there is any interest at all).
Projecting the Statement of Income and Expenses for the next year requires adjustments. All but one of the following expenses would need to be increased by the cost of inflation. Which expense would remain the same in that next period? transportation expenses food costs healthcare costs fixed-rate auto loan payments
Answer: fixed-rate auto loan payments Fixed-rate installment loans, such as student loan repayment, mortgage payment and auto loan payments, will remain the same throughout the period. The consumer price index is designed to measure inflation of living expenses, including food, rent (adjust annually), transportation, utilities and healthcare.
Which of the following trends would be interpreted as positive improvement? liquidity ratio was 4x last year and 3x this year housing ratio was 35% last year and 35% this year consumer debt ratio was 12% last year and 14% this year savings ratio was 3% last year and 4% this year
Answer: savings ratio was 3% last year and 4% this year Higher numbers for liquidity and savings ratio are positive, while lower numbers for housing debt, consumer debt and total debt are positive.
Which of the following is NOT considered a cash equivalent asset? certificate of deposit money market deposit account bank account savings account stock mutual fund
Answer: stock mutual fund Cash and cash equivalents are assets that can easily be converted to cash without significant transaction cost. Examples of cash equivalents include checking account, savings account, money market deposit account, certificate of deposit, US Treasury bills and notes, and a money market mutual fund. A stock mutual fund is subject to market fluctuations, which impact the value received. That is not a characteristic of a cash equivalent asset.
Assets
cash and cash equivalents, investments, use assets
liquid securities
certificate of deposit US treasury bills US savings bonds
What is the purpose of cash flow budgeting and how can it serve you as you move forward in your career?
Budgeting is a process that allows a person to proactively take control of his or her cash flows. It promotes an informed decision on how best to spend and save money.
bankruptcy
Decision of last resort. chapter 7 chapter 9 chapter 11 chapter 12 chapter 13
What are sources of information about home listing?
Zillow, Trulia, etc.
Amortized (Installment Debt)
Everything is paid back by at the maturation of the loan. Usually payments begin with mostly interest, and at the end, are mostly principal.
Employer income
FICA W-2 (report of inflows to IRS) W-4 (allowances to take out for taxes) employee benefits (exempt from income) take-home pay
Tax Form 1040
Gross Income - "above the line" deductions = adjusted gross income (AGI) AGI - "below the line" deductions = taxable income taxable income x tax rate = income liability income liability - tax credits = TAX DUE
What is the purpose of title insurance?
It insures the policy owner against financial loss if the title to real property is held by other people
What are sources of information about car prices, safety rating, and auto financing?
KBB, consumer reports, edmunds, national automobile, dealers association
appreciation potential
Location is most important. Buy the lowest-priced house in the best location, particularly if you can add square footage.
What's the difference between MSRP and dealer invoice?
MSRP--means little. Dealer invoice is the dealer's required cost to break even. The invoice price does not reflect manufacturer discounts.
credit union insurance
NCUSIF insurance, works same as FDIC
Various techniques for minimizing the Federal income tax liability. Describe any three of those tax-minimization techniques.
Tax minimization techniques include reducing gross income (e.g., income smoothing, deferring income, positioning investments in tax-advantaged accounts, shifting income to family members, replacing taxable securities with tax-exempt securities, harvesting tax losses and positioning), positioning for long-term capital gains, maximizing the above-the-line adjustments, maximizing below-the-line deductions, positioning for tax credits and planning for the alternative minimum tax.
Describe how the Federal tax liability for regular taxes (Form 1040) is calculated. What are the components and how do they contribute to the final tax due?
The calculation begins with gross income. Adjustments are permitted against gross income (i.e., above-the-line adjustments), which results in adjusted gross income. The greater of the standard deduction or below-the-line deductions reduce adjusted gross income. The regular tax rate schedule is applied to produce the tentative tax liability for regular taxes. Finally, any available tax credits off-set the tentative tax amount.
What is meant by a credit card's grace period? How does it impact financing charges, given: 1) no existing loan balance going into the month but credit card purchases within the month and 2) a loan balance at the beginning of the month plus monthly credit card charges?
The grace period refers to the amount of time before financing charges apply. The typical grace period is 30 days. If there is no existing balance due, then there won't be any interest charge on purchases within the month as long as the new purchases are paid off by the end of the month. In contrast, if there are existing balances, then there will be interest assessed on the balance plus any new charges within the month. The secret to using a credit card is to pay off the balances each and every month before the end of the grace period.
What are the major differences between revolving and installment credit?
The repayment period is more flexible with open credit, with fixed or variable interest payments. Debt is usually unsecured and there are higher interest rates, fees, and penalties. There is no maturity date for open credit. The loan amounts are usually much smaller for open credit
who pays for the title search?
The seller. Very important
Your first assigned video lecture from Week 1 was entitled "Introduction to Personal Finances." In that presentation, you examined ten important principles of personal finance. Select any three (3) of those principles and tell me why they are particularly relevant to you. How will they directly impact your future financial well-being?
The ten principles as described in the video presentation include: 1) acquire knowledge about personal finances, 2) time value of money, 3) risk and return, 4) the importance of planning, 5) the need to manage catastrophic risk exposure, 6) the value in taking control of your cash flows, 7) the need to maintain adequate liquidity, 8) tax minimization, 9) positive financial behaviors and 10) take action.
During class you researched two financial websites, which provided detailed information about credit cards. Identify the site you found to be the most useful and share two items of information that you found to be relevant.
The two sites were Bankrate.com and Creditcards.com
Why is it important for you to have a home inspection before funding the sale (escrow)?
To make sure that the house is in good condition.
Net Worth
Total Assets - total liabilities
progressive ordinary tax rate
a combination of taxes paid on each successive bracket you pass, minus the max income of the previous bracket
other provisions
acceleration or recourse clause (in case borrower does not comply with terms of contract) property maintenance clause insurance clause late charges
major differences between depository account types?
account balance required, interest, and number of checks allowed per month
consumer revolving credit (revolving debt)
an "open" line of credit, available to consumer as needed. line of credit with pre-approved credit limit. no finance charge if repaid by due date; otherwise, high finance charge with minimum payment due -higher interest rates, no collateral, and lower credit limits compared to installment debt
brokerage accounts
asset management account money market mutual fund
depositories
banks savings banks credit unions savings and loans
investment intermediaries
brokerage companies mutual fund companies venture capital firms investment banks trust institutions pooled investments
home equity line of credit
during draw period, your total line of credit amount is available as long as your initial withdraw amount is below the credit. once repayment period begins, there is no further withdrawal and the balance is fully amortized. You should have fixed monthly payments of principal and interest.
Mortgage Monthly Repayment Amount
function of interest rate, loan amount, term (# of years)
types of installment debt
home mortgage student loans auto loans personal loans home equity loans
cash flows
income, fixed expenses, variable-fixed expenses, taxes, discretionary expenses, surplus
chapter 7 bankruptcy
individual or business entity liquidation. NOT clean slate. Some forms of debt not wiped out, including:
chapter 13 bankruptcy
individual repayment plan. Working your way out of debt for 3-5 years
non-depositories
insurance companies financing companies pension plans
FDIC insurance
insures depositor accounts for up to 250,000 per FDIC bank, type of account, and per legal depositor account
home rentals
legal contract between tenant and landlord
closed (installment) debt. includes the following:
loan amount repayment terms collateral backing the loan cost of loan interest payments types of consumer installment debt debt management loan contracts maturity date
capital gain tax rate
long term is better than short term--hold asset for at least a year and one day
"below the line" deductions
un-reimbursed medical expenses (subject to AGI floor) state and local taxes (income, property, and sales, subject to cap) home mortgage and home equity loan interest (subject to cap) charitable contributions (subject to cap)
terms of loan
purchase price unpaid balance number of installment payments dollar amount of each installment when first installment is due
What are important neighborhood factors?
schools, safety, culture, night life, day life, etc.
installment loan contract
terms of loan and other provisions
gross income
the total amount of income from wages before any payroll deductions, as well as capital gains
