Cartões: FIN 310 MIDTERM 2 CSUF fall Gorski | Quizlet

Debt to Income Ratio

(DTI) compares how much you owe each month to how much you earn. Specifically, it's the percentage of your gross monthly income (before taxes) that goes towards rent, mortgage, credit cards, or other debt payments.

Loan Amortization

The repayment of a loan using equal monthly payments that cover a portion of the principal and the interest on the declining balance. The monthly payment amount going toward the interest starts large and steadily declines, while the amount going toward the principal starts small and steadily increases.

- Killing off a loan

Private Mortgage Insurance PMI

Private Mortgage Insurance is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan.

- We're paying someone to do something for us

Home Equity

Your home value minus your first mortgage balance.

- Ex. your home market value of your home is 200,000. However, you still owe 80,000 your home equity is 120,000

Assumable Mortgage Loan

one that can be transferred to a new buyer from the seller

Single Payment Loan or Balloon Loan

A payment that is paid back in a single lump-sum payment at maturity or the due date of the loan, which usually specified in the loan contract

- You pay back the borrowed amount plus all interest charges on that date.

Combined Single Limits

Auto Insurance liability coverage that combines both bodily injury and property damage

Split Limits

Auto insurance liability coverage that allows for separate coverage limits for bodily injury and property damage, split-coverage limits for bodily injury and property damage, split-coverage limits per person, or both

In other words, this coverage divides the limit up to 3 areas:

- One amount for bodily injury/death to one person = 15,000

- One amount for bodily injury/death to more than one person for the accident = 30,000

- One limit for property damage for the incident = 5,000

Assumption of Risk

maxim "volenti non fit injuria"; if a person knows the consequences of a particular act and voluntarily accepts that risk, he or she is solely responsible for any resulting injury.

Res Ipsa Loquitorn

"The thing speaks for itself"

Three Methods of Getting out of Credit Card and Other Debts

Math Method: Pay off the debt with the highest interest rate first while paying a minimum payment on the rest (highest savings but takes longer)

Momentum Method: Pay off the lowest balance debt first and then the next lowest, etc., while paying the minimum on the rest (most satisfying)

Shotgun Method: Pay more than the minimum payment on most or all your debt accounts (least effective)

Characteristics of Secured Loans

1. If the value of the auto has depreciated, which means it has reduced in value due to the passage of time and wear and tear, you might owe the lender additional cash beyond giving them your car.

2. Other assets that can be used as collateral are certificates of deposits (CD's), stocks, jewelry, land, and bank accounts.

3. Secured loans reduce lender risk

4 Requirements of all Legal Contracts

1. Agreements must be for a legal purpose

2. Parties must have legal capacity to contract

3. There must be a valid offer and acceptance

4. Promises must be supported by the exchange of consideration

Common Loan Clauses

Security Agreement: Who retains control over the item being purchased

Insurance Agreement: This is a loan requirement of a borrower to purchase credit life insurance that would pay off the loan if the borrower died. No benefit to the borrower just added cost

Acceleration Clause: If you miss one payment, the entire balance of the loan becomes due. If not, your collateral will be taken

- Note most lenders will allow you to make up the overdue payments before they decide to take your collateral

Life Insurance Parties

Owner: A person or Company who has an insurable interest buys a policy, and can also be the beneficiary or names some other beneficiary(ies)

Insured: Person whose life is insured

Beneficiary: Receives death benefit - no taxes

Conditional Beneficiary: Good idea since the proceeds pass to the Estate of the owner if the beneficiary predeceases the insured

Pros/Cons of Buying New, Used, Or leasing Vehicles

New:

- Pros: low interest rates, warranties, latest technology

- Cons: depreciation, insurance, return/ investments

Used:

- Pros: lower costs, smaller loan amount, quicker payoff

- Cons: interest rates may be higher, might not come with a warranty, car doesn't last as long as a new one, limited choices

Leasing:

- Pros: often upgrading, lower payments, maintenance and repair coverage, buyout option

- Cons: limit on miles, can't build equity, excess wear and tear could cost you

Personal vs. Real Property

Personal Property: Tangible property

Real Property: Land, things that grow on the land, things attached to the land, buildings

Types of Auto Leases

1. Closed-end lease: return the vehicle and walk away from further responsibilities

2. Purchase option: buy the car at the end of the lease for a fixed amount or residual value.

3. Open-end lease: end of the lease, the market value is compared to the estimated value left in the lease. YOU WILL OWE THE DIFFERENCE (it will not be favorable to the lease).

PITI

Principle-Interest-Taxes-Insurance; You can elect to have your taxes and insurance be part of your mortgage payment w/ an escrow account instead of making large separate payments for insurance and taxes. You can spread them out, and then the escrow account pays them when they are due.

Prepare to describe Term, Whole, and Universal Life Insurance

Term Life Insurance: Temporary Coverage, Lower Premiums, No Cash Value, Rent Policy

- Term is like renting a house that serves the purpose it is needed for at the time, yet there is no ownership.

Whole Life Insurance: Permanent Coverage, Higher Premiums, Builds Cash Value, Own Policy

- Whole is like buying a house. You have permanent ownership, and you can borrow money from the equity that builds in the house.

- You can borrow money from the cash value in a whole life policy.

Universal Life Insurance > Two Parts: Insurance & Investment

- Policy splits out the insurance portion from the investment (cash value) portion

HMO

Health Management Organization

- Primary Care Physician (Selected from HMO Network)

- All health care at one location

- Visit fee or co-payment

- Allows for health care at a discount

PPO

Preferred Provider Organization

- Primary Care Physician (More treatment access)

- Cross between traditional fee-for-service plan and an HMO

- Allows for health care at a higher cost vs HMO's

Workers' Compensation

No fault system

Exclusive remedy for injured workers AOE (arising out of employment)

Provides COE (Course of Employment):

- Medical care

- Rehabilitation (not in CA)

- Disability

- Death Benefits

Benefits:

- Temporary disability

- ⅔ of average weekly wage

- Minimum: 126$ a week

- Maximum: 840$ a week

- Tax-free

Open Perils vs. Named Perils

Peril: An event or happening, whether natural or man-made, that causes a financial loss

Open Perils: covers all perils except those specifically excluded

- Excluded Perils might be flood, earthquake, war, and nuclear accident

Named Perils: covers only the events specifically listed in the policy

Explain the use of an Umbrella Policy

An insurance policy that supplements liability coverage on a homeowner's and/or automobile insurance policy

- Kicks in after the homeowner's and/or automobile policy coverage runs out and provides coverage for claims not covered under homeowner's insurance, such as libel, slander, and invasion of privacy.

Bodily Injury

refers to a type of liability insurance coverage that can protect you if you injure someone else in an accident

Personal Injury

refers to a type of civil action against the party responsible for your damages

Med Pay Coverage

An add-on to your vehicle insurance that covers expenses that happened to/ in relation to a vehicle accident

Revolving Credit or Open Credit

A line of credit extended before the purchase and can be paid back at whatever pace you like as long as you pay a minimum balance each month

Average Daily Balance

A method of calculating the balance on which interest is paid by summing the outstanding balances owed each day during the billing period and dividing by the number of days in the period

Truth in Lending Act

Requires all consumer loan agreements to disclose APR in bold print

HO 1

basic form - Provides such very narrow coverage that it isn’t available in most states.

 

 

 

 

 

HO 2

Broad form - A named perils form of insurance. That is, it covers a set of named perils, such as fire, lightning, windstorm, and so on. If a peril isn’t specifically named in this policy, it isn’t covered. Typically costs 5% to 10% more than H O-1 coverage. covers the dwelling, other structures, and personal property on a named perils basis

HO 3

HO-3 (All-Risk Form)—Covers all direct physical losses to your home. It offers open perils protection, meaning it covers all perils except those specifically excluded. Excluded perils might include flood, earthquake, war, and nuclear accident. Typically costs 10% to 15% more than an H O-1 policy.

- These name the perils that are specifically excluded

HO 4

renters insurance H O-4 (Renter’s Form)—Aimed at renters or tenants and covers personal belongings but does not include liability insurance.

HO 6

condominium owners HO-6 (Condominium Form)—Provides personal property and liability insurance for co-op or condominium owners.

HO 8

for older homes

H O-8 (Older Homes Form)—Designed for older homes, insuring them for repair costs or actual cash value rather than replacement cost.Open perils insurance; think of open by looking at the 3 (The three looks like a clamp opening up)

DICE

Declarations, Insuring Agreement, Conditions & Exclusions: you're declaring what you need, you're making an agreement, and then there's condition and exclusion involved

Secured Loans

A loan that's guaranteed by a specific asset; secured loans are debt products that are protected by collateral - Anyone can get this type of loan

- Ex: A car loan. The bank doesn't have to worry about you making a payment because they can easily take your car away

Unsecured Loans

A loan that's NOT guaranteed by a specific asset; are debt products that are NOT backed up by collateral. A person must have a good credit history to get this type of loan

- The bank is taking a risk because it's a promise to pay back

- Ex: credit cards

Coinsurance

A provision of homeowners insurance that requires the insured to pay a portion of the claim if they purchased an inadequate amount of insurance (in this case, less than 80% of the home's full replacement cost)

- Essentially like a deductible for a car payment but it's for a house

Interest-Only Mortgage

You make only interest payments for an initial set period, after which you make both interest and principal payments. Once the interest-only period ends, your monthly payments are adjusted upward to reflect full amortization over the remaining years of the loan.

Endorsements

A written attachment to an insurance policy to add or subtract coverage

Bankruptcy

The inability to pay off your debts (Last resort)

Grace Period

The length of time given to make a payment before interest is charged against an outstanding balance on a credit card

- You would have to have an outstanding balance before you can get a grace period

Consumer Credit

Credit purchases for personal needs other than for home mortgages

- This card can include anything from an auto loan to credit card debt

FICO

Leading score in the industry, you can view your rough estimate on credit score and was developed by Fair, Isaacs & Company

- Ranges from 300 to 850 (most in the 600-700 - the median is 720)

Points

Points are calculated in relation to the loan amount. Each point equals one percent of the loan amount.

Title Search

An investigation of the public land records to determine the legal ownership rights to property or home

pink slip for car but for house. U do search , title search, county assessor office, buy from right person costs you a fee to determine the legal ownership of the property orhome so the transfer of ownership is a legal transaction.

Home Warranty

An agreement that ensures the structural soundness of a home

Affordable Care Act

Signed into law in 2010 by President Obama; commonly referred to as "Obama Care"

Intended to:

- Provide new consumer protections

- Improve quality and lowers costs

- Increase access to affordable care

- Hold insurance companies accountable

Inflation Guard

An endorsement that automatically updates the level of property coverage based on an index of replacement costs that continually updates the cost of building a home

- When inflation goes up, the guard also goes up to protect the replacement costs of your home or building during an accident

Renter's Insurance

An insurance policy that provides some of the benefits of homeowners' insurance, but does not include coverage for the dwelling, or structure, with the exception of small alterations that a tenant makes to the structure.

Personal Injury

physical injuries, mental injuries, or property damage caused to you by another party's negligence.

Libel

A written defamation of a person's character, reputation, business, or property rights

Slander

Someone saying a false statement about yourself to make you look bad

- Personal injury

Credit Report

contains identifying information, trade lines or credit accounts, inquiries, public record and collection items

Credit Scores

involves the numerical evaluation or "scoring" of applicants. This score is then evaluated according to a predetermined standard

Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009

a consumer protection law that protects consumers from unfair practices by credit card issuers by requiring more transparency in credit card terms & conditions and adding limits to charges and interest rates associated with credit

Pros/Cons of Cash Advances

Pros: fast access, little to no determining approval factors, not much paperwork

Cons: interest fees, short-term loans

Risk of Adjustable-Rate Loans

borrowers risk paying higher monthly payments after the introductory period expires

Mello-Roos

a California special tax district that sells bonds and levies taxes to fund new or additional community facilities and services within specific boundaries.

POS

Point of Service

- Allows seeking HMO or non-HMO Doctors

Disability Types

TD: Temporary disability

PD: Permanent disability

TTD: Temporary total disability

PPD: Permanent partial disability

Deductible

The amount you agree to pay before insurance coverage kicks in

CoPays

a payment made by a beneficiary (especially for health services) in addition to that made by an insurer

Merchant Discount Fee

The percentage of the sale that the merchant pays to the credit card issuer

Single Purpose Cards

A credit card that can be used only at a specific company

Annual Percentage

The true simple interest rate paid over the life of the loan

Utilization Score

Is how much credit you use (Shouldn't be above 30%)

Fixed Rate Loans

A loan with an interest rate that stays fixed for the duration of the loan

Liability

Legally enforceable obligation

Cer/Insurance (Certificate of Insurance) COI

A statement of coverage issued by the company that insures your business

- A certificate of liability insurance or proof of insurance for a business to insure their workers

Elements of Negligence

- A Duty of Care: The defendant must have had an obligation to the plaintiff to exercise a specific level of care.

- A Breach of Duty: The defendant must have failed to fulfill his obligation to the plaintiff.

- Proximate cause: The defendant's failure must have been the direct cause of injury.

- Foreseeable harm: The defendant must have had reason to believe that the breach of duty could lead to harm.

- Compensable damages: The plaintiff must have actually been harmed in a manner for which compensation is available

Adjustable-Rate Loans or AKA Variable-rate

Interest varies based on the market interest

Ainda aprendendo (66)

Você começou a estudar os termos a seguir. Continue assim!