Finance Exam 2

Front 1

Western Union is not _____

Back 1

a credit union

Front 2

The Three Credit Unions:

Back 2

1. Equifax
2. TransUnion
3. Experian

Front 3

If more than ______% is put down, there is no mortgage insurance necessary from lender.

Back 3

20%

Front 4

Paid by an ESCROW account:

Back 4

- Private mortgage
- Home owner's hazard insurance.
- Real Property Taxes.

Front 5

A mortgage loan generally should be no more than _____% of your annual income

Back 5

A mortgage loan generally should be no more than 28% of your annual income

Front 6

Total debt should be lower than ____% of your total income

Back 6

Total debt should be lower than 36% of your total income

Front 7

Lenders will go up to _____% and even higher with good credit scores.

Back 7

Lenders will go up to 45% and even higher with good credit scores.

Front 8

Commission is paid by:

Back 8

The Seller

Front 9

Reverse Mortgages:

Back 9

Reverse Mortgages: People take money off of their mortgage and, receive it as a line of credit.

Front 10

Home Owner's Insurance does NOT cover:

Back 10

Floods, acts of God, nuclear events, wars.

Front 11

Title Insurance only covers:

Back 11

Title Insurances only covers the title of your home.

Front 12

Home Owner's Insurance is Paid out of:

Back 12

Home Owners Insurance is paid out of an ESCROW Account.

Front 13

Lines of credit that are deductables:

Back 13

1st/2nd Line of Credit (INTEREST) is Deductible.

Front 14

_______ is required for a loan.

Back 14

Appraisal is required for a loan, a Home Inspection is NOT. They are done by different people.

Front 15

Credit cards are __________ type of credit:

Back 15

Credit cards are an OPEN LINE of credit

Front 16

Retail cards are ______ type of credit

Back 16

Retail cards (sears, etc.) are OPEN LINES of credit.

Front 17

Bank of Line Credit (over-draft protection) is WHAT type of credit.

Back 17

Bank of Line Credit (over-draft protection) is a OPEN LINE OF CREDIT

Front 18

Closed Lines of Credit:

Back 18

- Mortgages
- Automobile Loans
- Installment Loans

Front 19

Can avoid credit card bills if cancelled in writing within __ days of receiving card.

Back 19

Can avoid credit card bills if cancelled in writing within 40 days of receiving card.

Front 20

Companies must send an announcement to raise interest with __ days' notice.

Back 20

Companies must send an announcement to raise interest with 45 days' notice.

Front 21

Truth Lending Act: __________ Disclosures

Back 21

Truth Lending Act: Manditory Disclosures

Front 22

Makes it so you can cancel after 40 days of receiving statement, If card is lost or stolen and reported immediately there's only a $50 risk, Have 60 days to fix billing errors,

Back 22

Fair Credit Billing Act

Front 23

FICA tax rate in 1935

Back 23

FICA, 1935 rate was 1% on the first $3000 earnings.

Front 24

FICA:

Back 24

Federal Insurance Contributions Act

Front 25

Types of Taxes:

Back 25

1. Taxes on Purchases (Sales tax)
2. Taxes on Property (Real Estate, Business Personal Property)
3. Taxes on Wealth (Estate, inheritance, "Death tax")
4. Taxes on Earnings (US Income Tax, FICA):

Front 26

AGI

Back 26

Adjusted Gross Income

Front 27

Step one in determining TOTAL INCOME

Back 27

Determine Adjusted Gross Income (AGI)

Front 28

Types of Taxable Incomes:

Back 28

1. Earned Income (Wages, Tips, etc.)
2. Invested Income (Dividends, interest)
3. Passive Income (Alimony, prizes, winnings)

Front 29

Tax Due Date:

Back 29

April 15th

Front 30

Taxes can be delayed until:

Back 30

October 15th

Front 31

US tax system is __________

Back 31

Progressive

Front 32

Federal Tax Rates:

Back 32

10%, 15%, 28%, 33%, 35%

Front 33

A well managed family does not pay interest - it _____ it - L. Tom Perry

Back 33

A well managed family does not pay interest - it earns it

Front 34

Most investments are _________

Back 34

Most investments are compound.

Front 35

Three Methods in using TMV

Back 35

1. Using pre-printed tables.
2. Use a formula
3. Use a business calculator.

Front 36

A tax credit is:

Back 36

A credit is dollar-for-dollar reimbursement

Front 37

the exemption on the 1040 return:

Back 37

a deduction from gross income that represents the amount each person (yourself, spouse, dependents) can earn before income tax starts --$3,800 each.

Front 38

Types of Tax Filing Statuses:

Back 38

1. Single
2. Married Individual
3. Married Joint
4. Head of Household

Front 39

IRA deductions are NOT included on the _______ itemized deductions

Back 39

IRA deductions are NOT included on the Schedule A itemized deductions

Front 40

There may be ___ different lines on a return where you can deduct tuition

Back 40

There may be TWO different lines on a return where you can deduct tuition

Front 41

A deduction lowers your tax bill by _____

Back 41

A percentage

Front 42

Two disadvantages to using credit:

Back 42

Temptation to overspend, the overall cost of using credit

Front 43

you can get your annual fee refunded if you write the company: T/F?

Back 43

True

Front 44

Credit Card Float:

Back 44

The the float is the difference in time between when a transaction occurs and the time it is posted to a credit card account, often one to two days.

Front 45

Things paid out of an ESCROW Account:

Back 45

• Private mortgage
• Home owner's hazard insurance.
• Real Property Taxes.

Front 46

A mortgage loan generally should be no more than ___% of your annual income.

Back 46

28%

Front 47

Total debt should be lower than __% of your total income.

Back 47

36%

Front 48

Adjustable rate mortgages are usually start lower but then move up or down after a certain period, based on market conditions: T/F?

Back 48

True

Front 49

Seven Things included in closings costs:

Back 49

– Title insurance and search fee.
– Attorney’s and appraiser’s fees.
– Property survey; Pest inspection.
– Recording fees; Transfer taxes.
– Credit report; Lender’s origination fee.
– Escrow account for tax and insurance reserve.
– Pre-paid interest; Real estate commission.

Front 50

T/F: A credit score of 450 is average

Back 50

FALSE

Front 51

When comparing loans it is best to go with the lowest interest rate instead of APR; you'll save more money: T/F?

Back 51

FALSE

Front 52

Which credit card requires you to pay your bill in FULL each month?

Back 52

American Express CHARGE card

Front 53

T/F: A typical interest rate on a 30 year mortgage is 6.5%

Back 53

FALSE

Front 54

If an individual has an annual income of $100000, most brokers will require that their monthly mortgage payments are a maximum of:

Back 54

$28,000

Front 55

_________ taxes are usually a part of your monthly home payment.

Back 55

Real Estate

Front 56

A common risk with home ownership is:

Back 56

Home value may decrease

Front 57

A point paid when receiving a mortgage is:

Back 57

1% of the loan amount as to a cost of obtaining a loan.

Front 58

A home equity loan is also referred to as a _______ mortgage.

Back 58

second mortgage

Front 59

Refinancing your mortgage may be recommended when:

Back 59

Interest Rates fall

Front 60

If closing costs of $1600 are associated with closing a home (that brought the monthly payments down from $980 to $900) how long would to take to pay off the $1600?

Back 60

20 Months. 1600/80 = 20

Front 61

Child Tax Credit is not an example of _____________

Back 61

Itemized Deduction

Front 62

What types of plans allow you to pay qualified medical and dependent-care expenses with "pretax dollars"?

Back 62

Flexible-spending plans

Front 63

Types of Audits conducted by the IRS

Back 63

1. Correspondence Audit
2. Office Audit
3. Field Audit

Front 64

A tax DEDUCTION such as $2000 deposited into a traditional IRA for a person in the 25% tax bracket would result in a reduced tax bill of:

Back 64

$500. 2000 x 2.5 = 500

Front 65

A tax CREDIT such as a child tax credit, for 2 children for a person in the 25% tax bracket would result in a reduced tax bill of:

Back 65

$2000

Front 66

What type of loan is the interest tax deductible?

Back 66

A qualified home equity loan