Exam (elaborations)
FMLY 2400 Exam Study Guide
- Course
- Institution
FMLY 2400 Exam Study Guide ...
[Show more]
Content preview
FMLY 2400 Exam StudyGuide
Conventional Mortgage - Answer Down payment greater than 20%.
Large down payment = easier to obtain a mortgage
Does not require mortgage loan insurance.
Can avoid the CMHC fee (Canadian Mortgage and Housing Corporation)
High-ratio mortgage
Why are they popular? - Answer - Down payment less than 20%
- Requires mortgage insurance
If the borrower defaults the lender is paid back by the insurer.
Allows consumers to purchase homes at a rate similar to bigger down payments
Strategies to pay off a mortgage fast - Answer Shorten the amortization period
- Choose the shortest total length to pay off the entire mortgage that is affordable
Negotiate a lower-interest rate on renewal
- If mortgage rates are lower when it's time to renew, renegotiated
- If a lower rate is negotiated, keep amount of the mortgage payment the same
Make prepayments, if a prepayment option exists
Choose weekly or bi-weekly accelerated payment options
"Save and pay"
- Save in an RRSP
- Use the tax refund to pay down the mortgage each year
Home Buyers Plan - Answer a plan where first time home buyers can borrow up to $35k
from their RRSP to use toward a home. If you have a partner or spouse it becomes $35k
per person. The amount borrowed must be repaid over 15 years, or the money becomes
income on your tax return, no matter how big or small the amount. RRSP Based, Tax
sheltered growth is a main feature.
, TFSA - Answer a savings plan with limited contribution room each year. Tax is not
deducted from contributions, and withdrawals are not taxable. These are flexible
savings plans that could be used for many goals, not just home specific. Tax sheltered
growth is a main feature.
Risk vs. speculative risk
Which can be insured? - Answer Pure risk is a risk in which there is only a chance of
loss. Property, personal and liability risks fall under this category. This type of risk is
insurable, accidental, and unintentional. The nature of the risk can be predicted.
A speculative risk is that there is a chance of loss or a gain, but unfortunately it is
uninsurable. An example of this is starting a small business (may or may not succeed) or
gambling.
4 risk management methods
Explain what they are + give example - Answer Risk AVOIDANCE, in which to avoid the
chance of loss altogether. An example of this is avoiding certain routes when driving to
prevent accidents.
Risk REDUCTION, in which to reduce the chances of loss occurring. This type of method
is effective with peril risks. An example of this is preparing house for a big hurricane, or
wearing a seatbelt properly in a vehicle (not to prevent, but reduces chances of major
injuries)
Risk ASSUMPTION, in which you take on responsibility for loss or injury, risk was not
avoidable. An example of this is the aftermath of gambling. Self-insurance is a monetary
fund to cover the cost of loss.
Risk SHIFTING, in which the transfer of the cost of loss is forwarded to an insurance
company.
What is the difference between "named perils" and "all risks" on an insurance policy? -
Answer To provide consumers with the coverage best suited to their individual needs,
insurance companies offer several policy forms. Each form differs in the number of
perils, or events that could cause a loss, that it provides protection against. Named
perils coverage designates what's covered but also has exclusions. All risk coverage
assumes that everything is covered, except for the exclusions.
Two different policies:
1. "Named perils" policy
a. Only those perils that are specifically listed in the policy are covered should a loss
occur. If you suffer a loss to your property, you must show that the cause of the loss was
one of the perils named for the loss to be covered.
2. "All risk" policy
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Zayla. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75632 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now