FHCE 3200 Exam 2 with complete answers

capital asset - answer--almost everything you own or use for personal or investment purposes --your home --your car --investment like stocks, bonds, and mutual funds --ownership interest in small business you started --rental or other real estate you own basis - answer-the price you pay, when you buy a capital asset capital gain - answer-if you sell the asset for more than you paid for it capital loss - answer-if you sell the asset for less than what you paid for it break even - answer-if you sell the asset for what you paid for it (your basis), you will _______________________ on the sale government benefits - answer--often referred to as government transfers -can be categorized into four groups: --unemployment benefits --medicaid --SNAP and TANF --grants unemployment benefits - answer--cash payments made to individuals who lost their job due to no fault of their own --amount and duration of unemployment benefits depends on how much the employee was earning immediately prior to losing the job --benefits typically last for 26 weeks or less --maximum unemployment benefits are capped medicaid - answer--health insurance program for low-income households --unemployment benefits and medicaid work well together for someone who has lost job medicare - answer--federally run health insurance program for elderly individuals over the age of 65 --social security benefits and medicare work well together for someone who has retired supplemental nutrition assistance program (SNAP) - answer-provides money to low-income households to purchase food (also called food stamps) temporary assistance for needy families (TANF) - answer-provides supplemental income to very low-income, unemployed households, typically with children grant - answer-another form of government transfer federal pell grant program - answer--popular federal grant --provides financial aid for low-income undergraduate students --can be used toward a degree --not created equally grant amounts depends on: - answer--the student's expected family contribution (EFC) -the cost of attendance (as determined by the institution) -the student's enrollment status (full-time or part-time) -whether the student attends for a full academic year or less social security benefits - answer-based on earnings if you have sufficient earnings history, you or your dependents may qualify for the following benefits: - answer--retirement benefits when you retire -disability benefits if you become disabled -family benefits if you were to die while you are providing for children younger than age 18 three workers - answer-how many workers support one social security recipient? taxes - answer-financial obligations imposed on individuals and businesses by government entities governments use taxes to: - answer--build infrastructure -provide social welfare -pay for national defense -provide other public services -encourage economic activity types of taxes - answer--federal income taxes -state income taxes (when applicable) -payroll taxes -sales taxes -property taxes gross pay - answer-total amount earned before taxes and other deductions withholdings - answer--taken out of an employee's pay by the employer and are either: --mandated by law (federal, state, fica) --elected by employees (retirement, health and life insurance, disability insurance) net pay - answer-gross minus withholdings federal insurance contributions act (FICA) - answer-tax is used exclusively to pay for two government programs: social security and medicare FICA - social security - answer--applies to earned income up to $132,900 --6.2%of gross pay (half paid by employer; half paid by employee) FICA - medicare - answer--applies to all earned income --1.45% of gross pay (half paid by employer; half paid by employee) sales tax - answer-imposed by state and local governments on the sale of certain goods and services, and are paid when you buy something tax base - answer-amount of money that will be taxed, generally the cost of the item you purchase tax rate - answer-used to calculate the amount of tax owed and is generally denoted as a percentage rate, such as 7.5% property tax - answer-assessed based on the value of property you own, such as your car or your home --vary by state and are most often assessed by the city or country --often referred to as ad valorem taxes, which means "according to value" --based on the current assessed value of the property --determined by each taxing authority (city or state) yes - answer-do you pay property taxes after you've paid off your home? flat tax - answer--everyone pays the same tax rate -everyone shares the tax burden in proportion to his or her income regressive tax - answer-low-income earners pay a larger proportion of their incomes in taxes relative to high-income households progressive tax - answer--those with more income pay increasingly higher taxes -high-income earners pay a disproportionately larger amount of taxes federal surplus - answer--annual tax revenue exceeds annual federal expenditures --decreases the U.S. debt federal deficit - answer--annual expenditures exceed annual revenue --adds to the U.S. debt U.S. debt - answer-money that the U.S. has borrowed and must repay 2017 total U.S. debt - answer-~20 trillion tax return - answer-information that the taxpayer compiles and reports to the IRS on a standardized form tax-return process: required - answer-file a tax return if your income is above a certain level tax-return process: not required but a good idea - answer-file a tax return even if you owe no tax because you can claim a refund for any taxes withheld single - answer--not married -no dependent children or relatives married filing jointly - answer-must be legally married on the last day of the year (dec 31) married filing separately - answer-must be legally married on the last day of the tax year and choose to file separately head of household - answer--not married -support at least one qualifying dependent surviving spouse with dependent children - answer--spouse died within the three previous years and have not remarried -support at least one qualifying child types of tax forms - answer--form 1040EZ -form 1040A -form 1040 form 1040EZ - answer--a simplified tax form for --single or married-filing-jointly --income reported from wages or salaries --standard deduction use --no dependents form 1040A - answer--a more complicated form than form 1040EZ --allows other types of income reported (such as tips, interest, dividends, and scholarships) --allows the taxpayer to claim more deductions and tax credits form 1040 - answer--the standard tax form everyone can use -used by the highest-earning households -also used by households with modest incomes support - answer-the child did not provide more than half of his or her own support during the tax year age - answer-at the end of the tax year, the child is: -younger than 19 and younger than the taxpayer OR -a full-time student, younger than 24, and younger than the taxpayer relationship - answer--taxpayer's child, adopted child, stepchild, foster child, or his or descendent OR -taxpayer's sibling, half-sibling, step-sibling, or descendent of any of them abode - answer-the child must live with the taxpayer for more than half the year, excluding temporary absences such as schooling, vacations, and illness gross income - answer-the sum of all your income adjusted gross income (agi) - answer-amount calculated after the for agi deductions (expenses allowed by congress to offset gross income) taxable income - answer-the amount remaining to be taxed after the from agi deductions (standard or itemized) standard deduction - answer-an amount set by congress itemized deductions - answer-specific expenditures that taxpayers can claim instead of the standard deduction effective tax rate (average tax rate) - answer-measures the average tax an individual pays on his or her entire income effective tax rate - answer-total federal taxes / taxpayer's total income = capital gain income - answer-produced by owning capital assets --things you own for investment or personal use ---stocks ---mutual funds ---coin collections ---other investments ---personal belongings ---car ---real estate tax credit - answer-a dollar-for-dollar reduction in an assessed tax liability negative effective tax rates - answer--result when refundable tax credits exceed an individual's total tax --most common among low-income working households with dependent children and college students --bottom 20% of all households had an average effective federal tax rate of -9.2% --next 20% of all households had an average effective income tax rate of -2.3% refundable tax credits - answer-can reduce an individual's assessed tax below zero nonrefundable tax credits - answer-can reduce an individual's assessed tax to zero bu cannot make it negative education tax credits - answer--american opportunity credit -lifetime learning credit American opportunity credit - answer-partly refundable tax credit available to those who claim a student as a dependent on their tax return lifetime learning credit - answer-available to those who do not qualify for the american opportunity credit child-based tax credits - answer--earned income credit -child tax credit earned income credit - answer-a refundable credit designed to reward work and boost the earnings of low-income workers child tax credit - answer-a maximum nonrefundable credit per qualifying child ($7,000 in tax year 2018) health insurance tax credits - answer--advanced premium tax credit -premium tax credit advanced premium tax credit - answer-lowers the costs of monthly premiums of these insurance plans premium tax credit - answer-a refundable credit for those who do not have employer health insurance and buy via state or federal health insurance exchanges retirement savings credit - answer-retirement savings contribution credit retirement savings contribution credit - answer--congress lowers your taxes if you save for the future through this -a nonrefundable tax credit of up to $1,000 if you have: --income below a certain amount and contribute to an IRA --voluntary contributions to an employer-sponsored retirement plan employee - answer--your paycheck shows withholdings for FICA (payroll taxes) -receives a W-2 statement self-employed - answer--there will be no FICA withheld -receives 1099 statement at the end of the year self-employment taxes - answer--pay estimated tax payments quarterly: --due 15 days after the end of each calendar quarter self-employment tax - answer--employee's share a FICA, plus employer's share of FICA (15.3%) paid by self-employed individual -if income is greater than $400, but less than $128,400 -for income greater than $128,400, the tax rate is 2.9% 7.65% - answer-the total Social Security tax rate is half of which is paid by the employer and half by the employee (or all paid by the self-employed individual) realized income - answer-when you convert one asset into a different one for a gain such as: converting your human capital into a paycheck; selling your home that has increased in value recognized income - answer-when realized income is reported and taxed, which might exclude: scholarships for tuition fees - scholarship income for tuition is exempt from taxes education-related expenses - answer--tuition and fees paid -book and course supply expenses -other required expenses for school -statement for student loan interest paid health-related expenses - answer--premium for health insurance plan that is not purchased as an employee benefit -co-payments, deductions, prescriptions, and any doctor-prescribed purchases -mileage to and from health care offices (e.g., doctor or pharmacy) self-employment related expenses - answer--miles driven in your personal car for work-related purposes -any licensing, testing, study material, or other fees associated with your work -special tools, unique clothing (e.g., adventure-guide gear), or other equipment purchased by the self-employed personal 7 years - answer-how long do you keep tax records for? all of the above - answer-federal taxes are used to pay for which of the following national seeds? 8.9% - answer-what share of the total federal tax liability, as a percentage, do families in the middle quintile of the U.S. population own? $995,745.37 - answer-let's say that you live in a state where you do not have to pay state income tax. because of this ,you are able to save $500 a month on your tax bill. if you saved $500 a month for 40 years, assuming a 6% rate of return, how much will you have saved at the end of the 40 year period? individuals with higher incomes pay higher tax rates - answer-a progressive tax is the type of tax where _________________________________________________________________ the right to free tax services - answer-which of the following is not a right listed under the taxpayer bill of rights? true - answer-south dakota does not have state income tax capital loss - answer-which of the following happens when you sell an asset for less than you paid for it? $70,800 - answer-you purchased an apartment building for $700,000 and sold it 5 years later for $820,000. you paid 6% to the real estate agent who listed the property. how much is your realized gain? 26 weeks - answer-how long do unemployment benefits typically last? false - answer-medicaid is a health insurance program for individuals who are 65 years of age or older true - answer-social security is paid by employees, employers, and the self employed. those resources are placed into a trust and paid out to individuals who've reached retirement age and meet the work eligibility requirement to receive a social security check false - answer-a payroll advance is the process by which an employer automatically takes money from your paycheck and contributes it to a retirement plan or savings account save more tomorrow - answer-the financial strategy that encourages individuals to commit to putting half of every future raise towards savings social security - answer-which of the following does not represent a form of earnings? 33% - answer-based on the findings from the small business administration, what percentage of small businesses are around after 10 years? false - answer-the IRS does not want you to take full advantage of any deductions, credits or any other favorable tax treatment that might be available and beneficial to you taxes - answer-which of the following refers to financial obligations imposed on individuals and businesses by government entities? all of these answer choices are correct - answer-most working adults will pay the following types of taxes over the course of a year: flat rate system - answer-ebun lives in a country where all citizens pay the same tax rate regardless of income. what type of tax system does her government have? prevent tax fraud and the possibility of receiving a tax refund - answer-individuals should file their taxes based on the following reasons: sales tax - answer-the following form of taxation occurs whenever a person spends their money on a good or service false - answer-the IRS does not know how much I've earned if I do not file my taxes check - answer-simply a written order to a bank to pay a third party three elements when writing a check: - answer-1. the name of the person or company that gets the money 2. the date 3. the amount to be paid. the amount needs to be recorded both in numerical and written forms bank routing numbers with a bank account number - answer-allows a check written in one city at one bank to be cashed in another city at another bank checks and check alternatives - answer-such as money orders, certified checks, cashier's checks, and traveler's checks are rapidly being replaced with electronic payments advantages of checking accounts - answer-1. liquidity 2. direct deposit of paychecks 3. FDIC insurance 4. debit cards liquidity - answer-quick and easy way to access cash direct deposit of paychecks - answer-a way for an employer to transfer your earnings directly to your bank or credit union account FDIC insurance - answer-protection of all deposits up to $250,000 in case the bank or credit union falls checking account reconciliation - answer-simply the process of comparing your check or debit card register with your monthly bank statement electronic transactions - answer-quickly becoming standard -debit cards and prepaid cards traditional methods - answer-cash, coins, and checks hybrid methods - answer-peer-to-peer (P2P) and automated clearing house (ACH) automated clearing house (ACH) - answer-a nationwide network of financial institutions that send each other credit and debit transfers electronically -make up a high percentage of payments made in the United States -generally preferred by employers to pay wages and by lenders to schedule loan payments credit transfers - answer-include wages, salaries, Social Security benefits, and tax refunds debit transfers - answer-typically are payments for mortgages, utility bills, and credit card payments zero liability - answer-lost or stolen card reported before unauthorized transactions $50 liability limit - answer-lost or stolen card reported within two days $500 liability limit - answer-lost or stolen card reported within 60 days no protection - answer-after 60 days prepaid cards - answer-have loss potential and generally higher fees automated clearing house transfer - answer-Rahim purchased a car 6 months ago. When he applied for an auto loan, the lender required that Rahim allow the bank to automatically debit his checking account on the 15th day of each month until the car is paid for in full. This transfer is an example of what type of electronic payment method? emergency fund - answer-money set aside for expenses that have not been budgeted mainstream financial service providers - answer-banks, credit unions, and other deposit institutions alternative financial service providers - answer-auto title loans, payday loans, tax refund loans, pawn shops, or rent-to-own stores principal - answer-the amount of money you borrow (the loan) that must be repaid interest - answer-the amount paid to the lender for the use of their money - determined by the interest rate charged on the loan loan fees - answer-fees to cover processing or managing the loan elements of a loan - answer-principal, interest, loan fees collateral - answer-something of value that can be sold in the event that the loan payments are . not made by the owner; example: car or house finance charges - answer-the total amount of fees and interest charged by the lender for a loan fixed installment loans - answer--lending contracts where the borrower agrees to repay money via fixed monthly payments for the life of the loan --the borrower gets all the money at once and repays over time --the loan balance decreases until it's paid in full --include auto loans, education loans, and mortgages variable installment loans - answer--also structured so that the loan will be paid off within a certain time period, however, payments may fluctuate --if the interest rate changes, then the payments due and interest charged will change each month --caution - the change in interest charged may increase or decrease the loan payments or change the length of the loan --example, Adjustable Rate Mortgages (ARMs) interest charged on loan for one month - answer-(loan interest rate/12 months) X (loan balance) = amortization tables - answer--to calculate the interest charged, multiply the outstanding loan balance by the interest rate for the loan for a given time period --for example, on January 1, assume Jose borrows $1,000 with a fixed interest rate on the loan of 9.6% and a loan term of 12 months --Jose will be making monthly payments of $87.73 How much of Jose's February 1 loan payment would be interest charged for January, the first month of the loan? annual percentage rate (APR) - answer--a way to simplify comparison shopping for consumers (disclosure is required by the federal government) --a broad measure of the cost of borrowing - includes both the interest rate charged and any required fees for the loan credit report - answer-a summarized accounting of your credit history how credit reports are used - answer-a lender will request your credit report to determine creditworthiness when you apply for credit credit bureau - answer-a company that maintains housing and credit files on consumers 1. equifax 2. transunion 3. experian Fair Isaac Corporation (FICO) - answer-nation's leading credit-scoring company actions that have positively impacted credit report - answer-↑ Borrowed money from a company and used the purchased asset as collateral (e.g., buying a car, boat, motorcycle, furniture). ↑ Applied for, been accepted, and used a credit card. ↑ Took out a student loan. actions that negatively impacted credit report - answer-↓ Declared bankruptcy ↓ Lost a home to foreclosure ↓ Had been sued and lost the court battle. ↓ Incurred court-related judgments, liens, and unpaid financial obligations (e.g., child support, unpaid fines). inquiry - answer-when a lender requests your credit report to determine creditworthiness -lender uses the report to determine the probability that you will make timely payments in the future -every 30 days or so, the lender will report information to the credit bureaus about your outstanding balance and payment timeliness current creditors - answer-firms that you have borrowed money from Fair Credit Reporting Act (FCRA) - answer--requires Equifax, Experian, and TransUnion to provide you with a free copy of your report once every 12 months --you ought to get a copy just to make sure that everything in your report is accurate. Credit reports can have errors. --if you find an error on your credit report, you can contact the credit bureau to have the information corrected. - 30 days to contact whomever it concerns getting a copy of your credit report - answer-1. Gather the following information: --Name --Addresses for the past 2 years --Social security number --Date of birth --Payment information, such as student loan or car loan payment 2. Go to the website 3. Input your personal information and request your credit report from each of the credit bureaus. 4. Print out your credit report from each of the credit bureaus and keep it in a safe place. identity theft - answer-occurs when someone else uses your personal information, such as your name and Social Security number, to obtain credit victim of identity theft: - answer--Write to each of the credit bureaus directly, telling them that the information is inaccurate. -Write to the merchant(s) and dispute any items purchased that you did not buy. -If these actions do not work, contact the Federal Trade Commission and your state Attorney General's office. -You can also report the crime to local law enforcement. credit score - answer--a tally that summarizes a person's credit risk -used to predict which people are likely to manage their debt wisely in the future bad credit history - answer-someone who has history of not paying bills on time or repaying their loans FICO scores - answer-range from a low of 300 to a higher of 850 higher credit score - answer-= lower credit risk payment history - answer--35% --lenders look for on-time payments on loans amount of credit - answer--30% --available credit length of credit - answer--15% -longer = better new credit - answer--10% -less is more types of credits - answer--10% -mix of types 300-550 - answer-this range is low - usually leads to rejections for new credit 550-620 - answer-range is considered subprime - indicates a high-risk borrower, high interest and fees, limits amount of credit issued 620-680 - answer-range represents the minimum score to be accepted for most loans 680-740 - answer-range represents individuals with good credit. terms and conditions of loans will be favorable 740-850 - answer-range is considered excellent. borrowers have stellar previous payment histories and receive the best borrowing terms strategy for building a good credit score - answer-1. open line of credit; for example, apply for and obtain a credit card 2. buy necessary items like groceries and gas 3. with the first monthly statement, pay off the balance 4. repeat this process each month - keeping the account active basic rules to optimize your credit score - answer--keep revolving debt balances low --this means you should pay off as much of your unsecured debt as you can on a monthly basis -apply the ratio rule --lenders look at the total amount of credit lines available to you and compare that to how much you have used -avoid applying for lots of new credit cards at one time --individuals with a longer positive credit history tend to have a higher credit score -vary your credit mix credit card - answer-a loan that can be used at the borrower's discretion and convenience and has flexible repayment options co-signer - answer-an individual, in addition to the borrower, who will be held responsible for repayment of the debt secured credit cards - answer--provides a way to establish credit without a cosigner -requires the borrower to deposit the full amount of the line of credit at the bank as collateral before the credit card is issued 34 million - answer-how many people are unbanked or underbanked 63% - answer-what percentage of the U.S. population does not have the cash on hand to cover unexpected $500 to $1,000 emergency mainstream lenders - answer-banks credit unions auto-manufacturer financing credit card issuers merchant credit cards alternative lenders - answer-check cashers payday lenders title loans pawn shops seller-financed used car loans payday loans - answer-short-term loan designed to be repaid within a few weeks when the borrower receives a paycheck annual percentage rate (APR) - answer-on a payday or alternative loan is based on fees rather than a stated interest rate personal loans - answer-typically a small-dollar debt that can be used to pay bills or make purchases secured loans - answer--backed by collateral -property (such as car or valuable item) that can be taken by the lending institution if the borrower fails to repay the loan -examples: --vehicle loans (auto, truck, RV, etc) --mortgage loans --deposit advances --car title loans --pawn shop loans unsecured loans - answer--not backed by collateral -sometimes called signature loans -considered to be riskier than secured loans and therefore charge a higher interest rate -examples: --lines of credit --credit cards --payday loans installment loan - answer--the borrower receives the full amount of the loan upfront in a single lump sum --the interest rate is usually fixed --the payback period is fixed (in contrast to credit cards) --repayment periods generally from 1 to 5 years personal line of credit - answer--looks similar to credit cards; allowing the borrower to maintain a revolving balance month to month. --usually unsecured --the bank informs the borrower how much may be borrowed in total --the borrower is given a debit card or a checkbook --the borrower can then access the line of credit as needed --interest is only paid on the money borrowed deposit advance - answer--a short-term loan that is automatically repaid when the next qualifying electronic deposit is made (such as the next paycheck) --the borrower must have a checking account and a history of regular electronic deposits of paychecks, federal benefits, or other deposits --when a loan is needed, the borrower pays the bank approximately $10 for every $100 borrowed --the borrower then has 35 days to pay back the loan peer-to-peer (P2P) lending - answer--allows a borrower and lender to come together via the internet, such as Lending Club, Peerform, and Prosper --allows people 18 years of age or older to enter their personal information --each service provider creates a "lending score" that is driven by a borrower's credit report --those who have at least a 650 credit score can then ask lenders (known as investors) for a loan --loans can range from $1,000 to $40,000 --interest rates vary but generally do not exceed 32% APR federal student loans - answer--no credit check required -can be used to pay for school and living expenses federal work-study - answer--school-based employment that is subsidized by the federal government -students generally work on campus federal grants - answer--a cash reward paid to the school on behalf of the student -grant funds in excess of school expenses are paid to the student direct subsidized loans - answer--federal student loans made to undergraduate students who demonstrate a financial need. -if a student is enrolled in school for more than half-time, interest on these loans is paid by the federal government -these loans are the best value if you have to borrow direct unsubsidized loans - answer--made to undergraduate, graduate, and professional students. -interest is calculated on the loan balance until payments begin—which is usually 6 months after graduation - and continues throughout repayment -the annual amount a student can borrow under both the direct subsidized and direct unsubsidized loans is capped -students don't need to show a financial need to receive these loans direct PLUS loans - answer--available to graduate and professional students. -also available to parents of undergraduate students -interest is calculated on the loan balance until they're no longer attending school and payments begin -students don't need to show financial need to receive these loans direct consolidation loans - answer-allow students to consolidate all of their federal student loans into one easy-to-manage loan repayment - answer--repayment of federal student loans typically must begin within 6 months of completing school or when students are at half-time status or less. -the 6-month period is referred to as the grace period. -there are several different repayment plans that can be designed to fit your needs one benefit associated with all types of student loans—including federal student loans—is that the interest you pay may be tax-deductible grace period - answer-6-month period when repayment of school loans must begin repayment plans - answer--standard plan -graduated repayment plan -extended repayment plan -revised pay as you earn repayment plan (REPAYE) -pay as your earn repayment (PAYE) -income-based repayment plan (IRB) -income-contingent repayment plan (ICR) -income-sensitive repayment plan .25% - answer-automated payments can reduce interest rate by? use assets - answer-something that supports the current level of living of an individual or household, tend to go down in value (depreciate) automobiles - answer-most popular use asset purchasing an automobile - answer--determine your transportation needs -calculate how much you can afford -shop for a loan if you plan to borrow money -research specific vehicle models --identify those that best meet your needs and budget -obtain an estimate for auto insurance --for the specific vehicle you want to purchase -locate the specific vehicle you will purchase --negotiate a purchase price how much can you afford? - answer--review your monthly budget and determine your excess cash flow each month after contributing to savings and paying your bills. -Options: --withdraw the money directly from savings and pay cash for the car --use a combination of cash for a down payment and borrow the remainder with a loan --borrow the entire purchase price of the car with a loan 2-week period - answer-limit loan shopping to a __________________________ to minimize the impact of multiple credit inquiries other variables that determine the loan amount you qualify for: - answer-interest rate, loan term or repayment period the lower the interest rate - answer-the more you can borrow the longer the loan term - answer-the more you can borrow (you will also pay more interest) lowest interest rate possible - answer-the key variable to negotiate in an auto loan three loan offers - answer-obtain at least ______________ from different banks and credit unions before going to a dealer buying the car - answer--obtain an estimate for auto insurance --for the specific vehicle you want to purchase (covered in a later chapter in detail) -negotiate a purchase price --yes, you can negotiate! The seller needs to sell the car --make your search area as large as possible --dealerships can be good places to look for used cars --the best values generally come from private sellers lease payments - answer-much lower than loan payments and you get to drive a new car every few years car lease - answer--financial agreement between you and the dealership - you agree to pay a certain price for the right to drive the car for a set period of time --typically last around 3 years --there are lease inception fees, which include title fees, acquisition fees, security deposits, and other fees --at the end of the lease, you can purchase the car and pay an acquisition fee, or you can return the car to the dealership and pay a disposition fee. maintenance of renting - answer--None - provided by landlord -Limited ability to make improvements benefits of renting - answer--Flexible in the short term -Allows the option of moving -Don't need to worry about repairs benefits of buying - answer--Long-term stability -Allows owner to build value over time -Interest is tax-deductible costs of renting - answer--Application fee -Security deposit -First and last month's rent maintenance of buying - answer--Owner pays for all repairs -May have homeowners association (HOA) fee to pay for amenities and yard maintenance application deposit - answer-used in case your application is accepted and you decide not to move in security deposit - answer-money paid in advance to cover the cost of excess damage costs of buying - answer--Homeowner's insurance -Down payment -Closing costs and fees pet deposit - answer-used to help offset damages caused by pets reletting fee - answer-if you move out before the lease termination to cover the cost of renting the apartment again renters' insurance - answer-pays for any lost, damaged, or stolen property housing wealth - answer-represents more than half of many americans' total wealth mortgage - answer--special type of loan that is secured by land and all improvements on a piece of land, including a personal residence. -generally, mortgages have long repayment periods, most commonly 15 or 30 years -if the homeowner does not make the monthly mortgage payments, then the lender can take possession of the house and sell it to another buyer in a process known as foreclosure foreclosure - answer-if the homeowner does not make the monthly mortgage payments, then the lender can take possession of the house and sell it to another buyer housing payments-to-income ratio - answer--aka the front-end mortgage qualification ratio -the Federal Housing Authority (FHA) recommends homeowners not spend more than 31% of their monthly income on housing expenses -some mortgage lenders require housing expenses to be less than 28% of household income total fixed payments-to-income ratio - answer--aka the back-end mortgage qualification ratio -also recommended by the FHA, and should be less than 0.43 (or 43%), is the sum of the monthly housing payments plus all other monthly debt payments divided by total monthly income -some mortgage lenders require this ratio to be lower, at 36% real estate agents - answer--represent the buyer, the seller, or both -their experience can be quite helpful, especially when making an offer on a house mortgage loan officer - answer--specializes in mortgages and can help you get pre-approved for a loan -to be pre-approved for a loan means the lender has verified your credit, income, and other important facts and has indicated how much you are able to borrow pre-approved for a loan - answer-the lender has verified your credit, income, and other important facts and has indicated how much you are able to borrow good faith estimate (GFE) - answer-Loan type Loan amount Interest rate Expected monthly principal and interest payment Closing costs, which include all of the associated loan fees associated with buying a house housing equity - answer-the difference between what a house could sell for and the amount still owed on the mortgage housing equity is built in three ways: - answer--making a large down payment, minimizing the loan -paying down the mortgage loan, by making extra payments on the principle -when housing prices in the area increase, time is on your side