Personal Loans
What is the valuable asset a borrower pledges to a lender to secure a loan in case they can’t repay it?
Collateral
This type of federal student loan is awarded based on financial need.
Direct Subsidized Loan
What is the licensed professional who helps buyers and sellers in real estate transactions?
Real Estate Agent/ Realtor
What is the amount you pay for auto insurance coverage, either yearly or monthly?
Premium
What type of insurance covers personal belongings like furniture, clothing, and electronics if they are stolen or damaged?
"Your stuff" or basic homeowner's Policy
What three-digit number heavily influences whether you’re approved for a personal loan and what interest rate you receive?
Credit Score
Unlike subsidized loans, this federal student loan is available to all students regardless of financial need.
Direct Unsubsidized Loan
What is the loan used to purchase a home, where the property itself serves as collateral?
Mortgage
When your insurance price goes up due to accidents, tickets, or risky driving, this occurs.
Premium Increase
If someone gets hurt on your property or you accidentally damage someone else’s property, this coverage helps pay for medical bills or legal costs.
Liability Coverage
Lenders check this to understand your monthly money coming in and out to determine if you qualify for a personal loan and the maximum amount.
Cash Flow Statement
A graduate student needs extra funds for tuition. This type of loan could be used by them or by a parent of an undergraduate student to help pay for college expenses.
Direct Plus Loan
If your down payment is less than 20% on a conventional loan, you may have to pay this insurance to protect the lender.
PMI Private Mortgage Insurance
Generally, the more valuable your car is, the _______ your insurance cost, and the more you drive, the ________ your insurance cost.
Higher; Higher
Damage from floods, earthquakes, or regular wear and tear is not covered by a standard homeowner’s policy. What are the additional policy types called?
Add-on policies / endorsements
You borrow $1,000 at 5% simple interest for 3 years. Using the formula simple Interest, calculate the interest to be this amount.
Interest=1000×0.05×3
=150
A borrower has multiple federal student loans with different interest rates. They want to simplify repayment and potentially lower monthly payments. This process allows them to combine all their loans into one.
Direct Consolidation Loan
Some government-backed loans allow first-time or lower-income buyers to qualify for a mortgage with a lower down payment and easier approval than conventional loans. Name one of these loans.
FHA loan
Your insurance policy has a $50,000 coverage limit for property damage. What does this mean?
The insurance will not pay more than $50,000 for the claim, even if the damage costs more.
If you want to lower your homeowner’s insurance premium, you might increase this, but it means you pay more out-of-pocket if you file a claim.
deductible
You are offered two loans:
Loan A charges 10% simple interest for 3 years; Loan B charges 9% add-on interest for 3 years. Which loan could end up costing you more monthly, and why?
Loan B could cost more monthly because add-on interest calculates interest on the full principal for all months upfront, increasing monthly payments.
A parent considers taking out a Direct PLUS Loan to pay for their child’s tuition. Explain one financial risk they assume compared to the child taking out a federal student loan in their own name.
The parent is fully responsible for repayment, and if they cannot pay, it can affect their credit, unlike the child’s loan which is the student’s responsibility.
Why might a borrower choose a VA or USDA loan over a conventional loan, even if they qualify for both?
VA/USDA loans often require 0% down, no PMI, and offer easier approval and lower interest rates, reducing upfront and monthly costs.
A teen driver is choosing an insurance plan. Explain why buying only the state minimum liability coverage might not be enough.
Teens are statistically more likely to cause accidents, and state minimum coverage may not cover all costs, leaving them responsible for additional expenses.
Your home is worth $300,000, and your policy has a $250,000 dwelling coverage limit. A fire causes $280,000 in damage. How much will your insurance pay, and how much will you owe out-of-pocket?
Insurance pays $250,000; you pay $30,000 out-of-pocket.