Planning for Major Purchases Flashcards

Planning for Major Purchases Flashcards
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Mortgage Interest
This amount represents the cost you pay when borrowing money through a mortgage. It reduces your federal tax liability.
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Principal in Mortgages
We use this term when referring to the amount of money an individual borrows.
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Examples of government backed mortgage loans

Federal Housing Authority loans

Veteran's Administration loans

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30 Year Mortgage
These mortgages take longer to mature and have lower monthly payments. However, they have more interest and usually cost more in the long run.
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15 Year Mortgage
Mortgages that mature at this rate require higher monthly payments in exchange for a lower accrual of interest.
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Conventional Housing Loan
This kind of loan is a good choice for people purchasing their second home. It has no restrictions on the loan amount, but can include larger down payments.
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Federal Housing Authority (FHA) Housing Loan
A type of government-backed loan offered to some first-time homebuyers. It typically requires only a low down payment but has a maximum amount that varies by county.
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Veteran's Administration (VA) Housing Loan
These loans are offered to individuals who served in the armed forces, or their families. They typically have low interest rates and may not require a down payment.
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Flashcard Content Overview

You can access these flashcards to easily review 15 year and 30 year mortgages. You'll be able to go over conventional housing loans, Federal Housing Authority loans and Veteran's Administration housing loans. Differences between buying and leasing a vehicle will also be covered by these flashcards. Furthermore, these cards focus on deeds of trust and the clauses associated with this deed.

Front
Back
Veteran's Administration (VA) Housing Loan
These loans are offered to individuals who served in the armed forces, or their families. They typically have low interest rates and may not require a down payment.
Federal Housing Authority (FHA) Housing Loan
A type of government-backed loan offered to some first-time homebuyers. It typically requires only a low down payment but has a maximum amount that varies by county.
Conventional Housing Loan
This kind of loan is a good choice for people purchasing their second home. It has no restrictions on the loan amount, but can include larger down payments.
15 Year Mortgage
Mortgages that mature at this rate require higher monthly payments in exchange for a lower accrual of interest.
30 Year Mortgage
These mortgages take longer to mature and have lower monthly payments. However, they have more interest and usually cost more in the long run.
Examples of government backed mortgage loans

Federal Housing Authority loans

Veteran's Administration loans

Principal in Mortgages
We use this term when referring to the amount of money an individual borrows.
Mortgage Interest
This amount represents the cost you pay when borrowing money through a mortgage. It reduces your federal tax liability.
Factors related to borrowing interest rates

Borrower's income level

The credit score of the borrower

Total length of the loan

Other debts held by the borrower

Negative Equity
You get this type of equity when the balance you owe exceeds the value of what you own. Buying a car can lead to this kind of equity.
Disadvantages associated with leasing a vehicle

Restrictions on mileage

The car will never be paid off and owned

Car Leasing
A process that allows you to make smaller payments than buying and typically involves driving new model vehicles. Major vehicle repairs are covered under this process.
Options after a vehicle lease ends

Purchase the vehicle you leased with cash

Finance the leased vehicle to purchase it

Move on from the leased vehicle by leasing or buying a different vehicle

Accelerate Clause
A provision of a deed of trust that states that if a borrower defaults, all of their payments will be immediately due as a lump sum.
Reconveyance Clause
This deed of trust clause ensures that the legal title is transferred to the trustor once a loan is completely paid off.
Power of Sale Clause
A clause included in a deed of trust that allows trustees to sell a property through auction without getting permission from a court to foreclose.
Deed of Trust
Some states allow this agreement as an alternative choice to mortgages. A trustor, trustee and beneficiary are involved in this agreement.

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