Personal Finance Chapter 5

Which of the following is not one of the foundational approaches to evaluate the risk of a loan?

Collateral (wrong)

Which of the following is NOT a key attribute of items that are generally used as collateral?

Potential for appreciation

Where do the credit reporting agencies get most of their information?

government reporting agencies (wrong)

Which of the following generally has the biggest effect on your credit score?

Payment history

If your credit has been checked by many others recently, your credit score tends to decrease.

True

A credit score can only affect your ability to borrownmoney

false

Avoiding borrowing any money will increase your credit score

false

What is unsecured debt?

debt without collateral

What is a tax deduction?

amount deducted from your income to calculate taxes owed

Assuming you have No other debt, what is the conservative percentage of your income that can be paid for a mortgage payment and have it still be classified as a conforming loan?

28%

Which of these will typically have the higher monthly mortgage payment?

15 year fixed

Finding the most you can barrow and then finding a house to correspond to that value is one of the best strategies to go shopping for a house

false

One of the disadvantages of paying less than 20% as a down payment is that

you must pay additional mortgage insurance each month

Whats a short sale?

A sale where the value of the mortgage exceeds the net sale price of the home

For some people, a home equity line of credit (or HELOC) could be a good strategy to refinance and consolidate credit card debt

true

If you carry a balance on your credit card, you will be charged

An interest charge according to your APR

What happens if you do not pay the minimum payment on a credit card?

All other answers

Why should you act immediately if you do not recognize a charge on your credit card?

all other answers

What are credit card garners?

Individuals who frequently try to take full advantage of credit card company promotions

What generally occurs in a chapter 7 bankruptcy?

You lose nearly all of your assets (wrong)

Which type of household debt is the highest in the United States and in almost every developed country in the world?

mortgages

What type of debt generally cannot be discharged in bankruptcy in the United States?

Student loans

Which of the following is NOT a benefit of the avalanche method of debt repayment?

Maximizes near-term cash flow

What is the benefit of a subsidized student loan?

Interest does not accrue while you are still in school

If you have struggles repaying your student loan, the income-based repayment plan may likely provide short-term relief

true

At the end of an income-based repayment plan for a student loan, the remaining balance is

Forgiven and recognized as a loss by the federal government

Your FICO score can be used to evaluate whether you should be hired at a company

true

How many numbers are in a CVV code?

3 or 4

Checking your own credit report or credit score will lower your score

false

what is often the simplest and most effective way to increase your credit score?

begin paying on time

What is foreclosure?

When a lender takes possession of a mortgaged property

What is the approximate minimum payment for a card with a $1,000 balance?

20

In a standard 30 year fixed mortgage, when is the potential tax deduction on mortgage interest the greatest?

The beginning of the payment period

What does ARM stand for in the mortgage jargon?

Adjustable rate mortgage

A reverse mortgage is different from a traditional mortgage in that for a reverse mortgage the lender pays you monthly instead of you paying the lender monthly

true

What does the T in PITI stand for

taxes

Payday loans frequently carry low and manageable interest rates

false

Credit card processors, issuers, merchants, and acquires are typically all the same company in the developed world

false

All credit card have annual fees

false

If you find yourself struggling to make your monthly payment on your student loans an income based repayment plan might be the best for you

true