Personal Finance Unit 2 Term Paper

16) Which of the following would be LEAST likely to lower the interest rate that a bank offers a borrower?

b. Your family member signs a promissory note to you stating when she will begin making monthly payments on this loan

The mortgage rate on your home is determined by the lender that gives you the money to purchase the house. The mortgage rate

The ratio of adjustable-rate mortgages to fixed-rate mortgages is lowest when interest rates are low because borrowers prefer to lock in the low market rates for long periods of time. When rates are high, adjustable-rate mortgages allow borrowers the potential to realize relief from high interest rates in the future when rates decline.

c. Smaller payments mean more time in debt. d. Your lower interest loans also get rolled into the deal so you end up with minimal savings.

If you decide to get an adjustable rate mortgage over a fixed rate mortgage, make sure you know exactly how high you can go with a fluctuating interest rate and still be comfortable with the monthly payments. Factor in the “wiggle room” in your monthly budget, just in case. This could be the difference between being able to afford to keep your house and losing it to foreclosure, if the rate goes skyrocket in the

On a personal level, high interest rates can deter you from buying a house or a car because the cost of financing would be too

* By reducing the interest rate or by changing the terms from floating rate to fixed rate - the interest rate on the borrower's mortgage is tied directly to the monthly installment.

After reading chapter 1 and watching the video, I have concluded that chemical dependency is a combination of bad habits, addiction and behavior disorder. I believe that all three are woven into one, based upon information provided in this chapter 1. Addiction is probably the easiest to link to chemical dependency, Nora Volkow 2010 studies of drug-addicted individuals shows the physical changes in areas of the brain, which are critical to judgment, learning and memory and behavior control. No one disputes when you see someone drunk or high that we believe his or her own something or have become dependent on some type of chemical. However, bad habits are probably one of the most difficult to link to chemical dependency. Even the information

Getting a home loan is very easy nowadays. However, choosing the best option is always a complex aspect. One should do proper homework before rushing in to something. While applying for a home loan, the first thing that will bother the applicants is whether to go for fixed interest rate or floating interest rate. Let us see which option is better.

Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house. When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for example, your deposit generally will range from $500 - $2,000. The more money you can put into your down payment, the lower your mortgage payments will be. Generally most banks will want a 10% to 20% payment to put down towards your loan. The more money you can put into your down payment, the lower your mortgage payments will be.

Interest rates are normally associated with inflation. Consumer spending and economic growth is encouraged as a result of low interest rates. However, inflation can occur if supply is lower than demand due to consumption increases but this is indeed not a bad outcome though foreign trade and investment will be lacklustre as opposed to the cash rate being higher which more likely attracts foreign investment and trade.

Is your credit strong enough to get the best deal? No matter what rates you see advertised, the best rates are reserved for people with the best credit profiles. If your credit has deteriorated since you first purchased the home, the rate on the new loan may be adjusted higher. It 's even possible that the rate on the new loan will be higher than what you have right now, due to negative changes in your credit profile.

Interest rates have a major economic impact on the real estate market. Interest rates directly affect property sales. Residential property realizes the greatest affect as interest rates have a considerable influence on a homebuyer’s capability to purchase a new property. The customer is affected when there are significant increases or decreases in interest rates. Declining interest rates lower the costs of obtaining a mortgage; this in turn creates higher demand for homes, and pushes home prices up. Conversely, high interest rates increase the costs to obtain a mortgage; these increases lower the demand for homes, which creates a decline in home prices. (Stammers, 2016)

The two central facts are these: for reasons we’ll discuss, buyers buy a monthly payment, not a house price, and buyers buy as much house as they can afford. This brings us to the heart of the matter: mortgages that require no down payment, and only interest payments, alter the structure of the demand curve for real estate, in a way that is harmless enough when interest rates are high, but which drives a bubble at low interest rates. Specifically, they make housing prices inversely proportional to the interest rate. If interest rates are cut in half, house prices double. When those rates double, house prices are slashed in half. When interest rates are large, they are not likely to double or halve, but when interest rates are small, a small adjustment can be a big percentage change, and the danger of big swings in housing prices is appreciable, even inevitable. With no down payment, no amortization and closing costs folded into the loan, the only issue in affording a house is the monthly payment, which is the house price multiplied by the interest rate. If interest rates are cut in half, the house you can buy with a given monthly payment costs twice as much. But the same number of people with the same income distribution is competing for a fixed stock of housing. The house price is bid up until the new monthly payment at the new interest rate matches the old monthly payment at the old interest rate. The house price varies inversely