Exam 8: The Home and Automobile Decision

How does Smart buying improve your standard of living?

Another name for a closed-end lease is a(n)

Smart buying means buying what you want first and figuring out how you'll pay for it later.

Daniel is due to receive the balance of his trust fund in 5 years; as a result he has taken out a ________ mortgage where he has made small payments for several years and will pay off the balance in one large payment with his trust funds.

Why is important to determine your housing needs not only for the present but also for the next several years?

It's advisable to always take the biggest loan that a lender will give you.

When making a smart purchase you don't need to consider such charges as delivery fees, installation fees or service costs as these are already included in the purchase price.

Your mortgage is an ARM with a 1 year adjustment interval, 4% margin, and a 2% periodic cap. Your initial APR on this loan was 4.5%. Over the last 5 years the market rates of interest have risen dramatically. The current interest rate index for your loan is 8.5 %. What APR are your monthly payments being calculated on today?

Leasing a car may make sense if you drive over 25,000 miles a year.

Why is it that you should not tell the salesperson what you want your monthly payment to be before you negotiate the final price on the car?

A down payment is the initial buyer's equity in the asset being purchased.

The initial rate on an adjustable rate mortgage (ARM) is sometimes called the teaser rate.

List three pros of an assumable loan.

A mortgage loan in which the interest rate charged fluctuates with the level of current interest rates is called a(n) ________.

What would be the best housing choice for a young family with children?

An adjustable rate mortgage (ARM) is always a wise financial decision for young consumers because their incomes will be adjusting as well.

The typical down payment is 20% for traditional mortgage loans.

Hector a Maria have been married for almost one year now and are thinking about buying a house. Maria is an executive for a large, multi-national corporation with offices around the world. She has been told by her company that she will be transferred to a new location every three years. Hector is a car salesman and he is willing to move to wherever Maria gets transferred. Together they make $8,000 in gross monthly income and pay 40% in taxes and withholdings every month. Between them they have monthly payment of $400 in student loans and $700 in car loans, and their credit cards payments average $450 per month. They currently lease a luxury condo for $1,400 per month. They travel to Cancun every Christmas. Since they both work a lot of hours, they eat out at restaurants for most meals. They currently have nothing in savings but Hector's grandparents have said they will give them a 20% downpayment for the new home. -August's gross monthly income is $4,600. If according to the rule of 36 he can afford a maximum PITI of $1,125, what must his monthly consumer credit debt be?

Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full.

An automobile warranty provides coverage for the basic parts against manufacturer's defects for a set period of time or miles.