Ramsey Classroom Chapter 11 Study Guide

The only time it's okay to borrow money if you can't pay 100% in cash is . . .

Buying a home (mortgage)

When you're ready to buy a house, the best option is a _____________.

15-year fixed-rate conventional mortgage

What information should a lease contain?

Property address, rental term, security deposit terms, and pet fees

Making periodic payments to a landlord for the use of their property is called ___________.

Renting or leasing

It is impossible to get a mortgage without a credit score.

False

You need to be completely out of debt, have a fully funded emergency fund, and have saved enough cash for a down payment before you _______________.

Buy a house

As you shop around and compare rent prices, remember that paying extra for ________ is not worth it if it keeps you from reaching your financial goals.

Amenities

Which type of loan is not secured by a government entity and usually has the best rate and term?

Conventional loan

A house is an asset that typically will ________ value over time.

increase in

It's best to develop good _________ now instead of waiting until you're on your own to figure it all out.

Money habits

Your rent payment should total no more than ___% of your take-home pay.

25

If you look at long-term costs, _____ is usually the better deal.

home ownership

Equity is the difference between what you still owe on your home and what it is worth.

True

Buying a house while _____ can put your ________ at risk.

In debt; home purchase

When someone spends so much of their income on the costs of homeownership that they struggle to reach their other financial goals, they are _______.

house poor

What does cost of living refer to?

The average cost of the basic goods and services needed to maintain a certain standard of living

You should buy a home, even if you cannot afford it just yet. Renting is a waste of money.

False

Living on campus at college will help you ______ living on your own, while living off campus will require you to ___________.

Ease into; pay for rent, utilities, and groceries

Learning about the costs of living before you need to cover them and creating good money habits early are both examples of _______________.

taking personal responsibility

After you hire a real estate agent, the next step in the process is to _____________.

Start looking at homes within your budget

Renting is a great option for many people.

True

A leasing contract...

Is a legal document that allows the renter (tenant) to use the property for a period of time

What type of interest rate is locked in and won't change for the life of the loan?

Fixed- rate

Your decision to rent or buy depends on your _________.

Financial situation

No matter what path you choose to take after high school, the money principles stay the same. What are they?

Save, budget, stay out of debt, live on less than you make, and be generous.

To make living with a roommate more peaceful while you're saving money...

Communicate, be respectful, and be considerate

What is your mortgage principal?

The amount borrowed (that must be repaid) to purchase a home

You should rent until you are able to _______.

Buy a home the right way

It's important to read your leasing contract, because once you sign it, is enforceable by law.

True

A fixed-rate mortgage has a ___________ mortgage rate for _________ years.

Set; a set number of

What are some of the costs of living on your own?

The median rent in the U.S. can range from nearly $4,000 at the high end to under $800 on the low end. And then there are security deposits, utilities, furniture, food, renters insurance, and more to think about.

What are some ways that someone can save money on their rent?

Get a roommate and sign an extended lease

Explain how renting or buying a home is connected with someone's ability to be generous?

Since your ability to afford the house or place of rent while still being generous and not house poor.

what are some good questions you could ask an adult to help you prepare to be financially independent someday?

What if my bills are fixed costs? Which are variable costs?

Why is a 15 year fixed-rate mortgage better than a 30 year?

In exchange, they are given a lower interest rate. This means that borrowers with a 15-year term pay their debt in half the time and possibly save thousands of dollars over the life of their mortgage.

using examples from the text give some examples of the advantages and disadvantages of renting and owning a home

The renting advantage is that the landlord takes care of maintenance, utility costs less expensive. The renting disadvantage is that rent rates can go up, no financial advantages. The owning advantage is that the value of your house can increase, tax deductions. The owning disadvantage is that relocating can be difficult, you are responsible for all maintenance.

why is it important to do The Five Foundations in order?

So that you can do everything in order to stay debt free in life. Also to have enough money in life to buy a house and things all from your money no debt.