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epf 5b
| Question | Answer |
|---|---|
| Savings | portion of income not spent on consumption. |
| Time value of money | money available at the present time is worth more than the same amount if received in the future. |
| Compound interest | earning interest on interest at a regular interval. |
| Simple interest | the rate that you pay over the term of the loan. |
| Interest payment | part of a loan payment that pays only the interest on the loan amount. |
| Principal payment | part of a loan payment that pays down the principal loan amount. |
| PITI (principle, interest, taxes, insurance) | these are the basic components of a monthly payment on a house; you may have additional fees such a HOA’s. |
| Pay yourself first | saving for the future by putting money aside before paying regular monthly bills or using income for discretionary purchases. |
| Cost of living | the amount a person needs to spend to cover basic expenses such as housing, food, taxes, and healthcare in a particular place. |
| Constraint | when a consumer is limited in consumption patterns by a certain income. |
| Aggressive investment | a style of portfolio management that attempts to maximize returns by taking a relatively higher degree of risk. |
| Conservative investment | prioritizes preserving the purchasing power of one's capital with the least amount of risk. Investment strategies will typically include a relatively high to low-risk securities such as high-quality bonds, money markets, and cash equivalents. |
| Periodic expenses | costs that occur on an irregular basis and not monthly. |
| Utilities | many of these types you will pay will depend on the features of the living space such as type of heat, access to municipal water/sewer, availability of cable/internet/phone; when renting you should always ask about the types covered |
| Escrow accounts | an account where money is held in trust until it can be delivered to a designated party; this is required on mortgages not secured with a 20% down payment to hold projected taxes and insurance. |
| Annual percentage rate | the cost of credit expressed as a yearly interest rate. |
| Credit rating | used to determine whether you qualify for certain types of loans as well as the rate you qualify for; a hard-hit will be made on your credit report as applying for a mortgage implies you are credit-seeking a significant amount. |
| Refinancing | mortgage holders who wish to us either equity or seek a lower interest rate can apply for refinancing loans that allow them to either use equity over 20% of the current market price or lower their monthly payments with a lower interest rate. |
| Renovation loan | allows borrowers to buy the home they want and pay for their desired renovations and repairs all under a single loan. |
| Home equity loan | a loan based on the difference between the current market value of a home and the amount the borrower owes on the mortgage. |
Created by:
deissyg
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