Investing Exam 3

social security

provides retirement benefits and disability; must pay into the system for 40 quarters (10 years)

medicare

government health insurance plan that provides coverage for people aged 65+

affordable care act

law that governs medical care; you can’t be denied care if you have a pre-existing condition

26

age limit to be on your parents healthcare

COBRA

allows you to stay on your previous employers healthcare for up to18 months or until you find a new provider; not free, often 100%-102% of premium

HSA

ira for healthcare; save money in a tax deferred account and no taxes are taken out if the money is withdrawn for healthcare; paid for by the individual

FSA

ira for healthcare; paid for by the employer; doesn’t roll over year to year

equity

ownership

price of the house goes up and you pay off your mortgage

two ways your equity goes up

conventional home loan

loan that is best for borrowers with good credit

jumbo loan

loan that’s best for borrowers buying large or expensive homes

government backed

a loan that doesn’t require 20% down because the government funds it

fixed rate mortgage

a loan that has the same interest rate the full length of the mortgage

adjustable rate mortgage

the lender is able to adjust the rate as interest rates fluctuate

PMI

pays the bank if you default; required of homeowners if they have less than 20% to put down; is .5%-2.25% of the mortgage; can me removed after you hit 20%

Refi

allows you to take advantage of lower rates; must pay off current mortgage and start a new one

28/36 rule

calculates how much debt an individual or a household should assume; your mortgage should be 28% or less of your monthly income