HACE 2100: Final Review
51 Cards in this Set
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Front end ratio
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-PITI/gross income
-needs to be less than 25-28% of gross income (monthly)
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Back end ratio
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-PITI+ other debts/gross income
-should be less than 33-36% of gross income
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Housing bubble
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-occurs when the market price of the asset is substantially higher than the fundamental economic value
-expectations are for housing prices to continually rise but then demand levels off and bursts bubble
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Housing affordability index
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-median family income/ annual income needed to buy median priced home
-if over 100, median income more than covers loan payments
-if under 100, median income covers less than needed
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Current housing affordability index
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133.6
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Solvency ratio
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-shows how much of a decline in the market value of your assets a family can handle before becoming insolvent
-SR= net worth/total assets
-desirable: >.5
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Liquidity ratio
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shows how much of their one year liabilities they could pay with their liquid assets
-LR=liquid assets/total current liabilities
-total current liabilities includes one year's worth of mortgage and other loan payments
-divide by .083= # of months
-desirable is .5/6months or better
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Savings ratio
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-shows level of preparedness for the future
-SR=cash surplus (or amount saved)/annual net income
-gross income-taxes/SS= net income
-include stocks and retirement funds in cash surplus***********
-desirable is 5% or better
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Debt Service Ratio
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-shows burden of family's debt relative to income
-DSR=annual loan payments/annual gross income
-the lower the better
-.35 or less
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Indemnity plan
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-typically 80/20 coinsurance
-amount paid based on UCR
-most flexible type of plan
-"cadillac policy", "plan of the past"
-expensive for provider
-accepted by all doctors, do not need referral to specialist
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Fee-for-service health plans
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indemnity plan
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Managed care health plans
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-HMO
-PPO
-POS
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HMO
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health maintenance organization
-low co-pay
-low premium
-either group or IPA
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Group HMO
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-from a central location (larger cities)
-cannot choose physician or personnel
-must be referred into specialist
Ex: Kaiser permanente
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IPA HMO
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individual practice association
-physicians practice from their own practices and hospitals that are affiliated with IPA
-physicians agree to participate and accept terms
-have some choice over physician and hospitals
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PPO
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-use services of particular physicians and hospitals that agree to specific, set schedule of fees
-have a deductible
-copay and coinsurance
-network of doctors (and out of network payments)
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POS
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-point of service plan
-hybrid between PPO and HMO
-allows members to go outside of HMO network and reimburses a certain percentage
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Consumer driven health plans
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-HDHP and HSA
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HDHP and HSA
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-high deductible
-low premiums
-high stop loss
-"plan of the future"
-paired with health savings account
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Goals of Affordable Health Care Act
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-cover >94% of population
-bar insurance companies from discriminating
-tax credits and cost sharing for insured lower and middle income households
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Distribution of health care purchases
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-1/10 buy insurance themselves
-1/10 may not have it at all
-5/10 get it from employer
-3/10 medicaid
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Number of births
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-actual number of live births to any individual in a population
-total number of children born
-no denominator
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Crude birth rate
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-number of births per 1000 population
-includes post-menopausal women and men
-used as economic indicator between countries
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General fertility rate
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-number of births per 1000 women aged 15-44
-if you divide by 1000 and multiply by 100, it tells us what percentage had a birth
-in baby boom=11.83%, now=6.32%
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Age specific fertility rate
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-number of births by women of a specific age in relation to all women in that age range
-25-29 is the highest age group (used to be 20-24 but not people postpone)
-huge increase in 35-39 and 30-34
-decrease in teen pregnancy recently
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Total fertility rate
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-average number of children that would be born to women by the time she ended childbearing
-synthetic rate
-shows us on the scale of replacement rate
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Replacement rate
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2.1 children per woman
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Fertility trends
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-1930's: all time low
-1950's and 60's: baby boom
-1970-1980: baby bust
-1990: baby boomlet
-decrease since 2008
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Causes of long term fertility trends
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-increase in costs of having and raising children (inflation, increase in child quality, opportunity costs)
-decrease in economic benefits of children (don't work in fields anymore)
--decrease in the costs of avoiding having children (bc, legalization of abortion, secularization)
-soci…
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Price effect
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"an increase in the price of children will decrease the number of children demanded"
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Income effect
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"a rise in one's income will increase the number of children demanded"
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Period effect
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a change in fertility of all age groups (all cohorts) in a similar manner that results from something happening at that historical time
-influences taste and preferences
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Cohort effect
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a change in fertility of a group born at the same time that results from earlier shared experiences
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Relative income effect
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-most likely explanation for cyclical changes
-income relative to expectations
-relative to parents' income and expectations of future income
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Percent childless since 1976
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risen across all age groups
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Foreclosures
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-occurs when homeowners with mortgages default on their loans and lenders choose to exercise their collateral claim on the home
-currently 1 in every 1136 homes is foreclosed in US
-GA is 1 in 841
-top state is florida
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Underwater on mortgage
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-house is worth less than mortgage you are paying on it
-negative equity position
-about 2.4 mill in US
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Mortgage interest rates 1963 to 2005
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1963: 6%
1980's: 15%
2005: 6%
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Housing options
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-single family homes
-cooperatives
-condominiums
-apartments
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Single family houses
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-a housing unit detached from others
- own the land, building, and all improvement
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Advantages of single family homes
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-resale value generally the highest
-investment option
-causes you to build equity
-some tax benefits
-you can modify and improve as you wish
-feelings of permanence and stability
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Disadvantages of single family homes
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maintenance time and costs
-repair costs
-resale hassles
-more expensive
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Cooperatives
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-democratically governed non-profit corporation in which the residents, as shareholders, own stock representative of the value of their unit
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Advantages of cooperatives
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low maintenance
-more amenities
-higher security
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Disadvantages of a cooperative
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-only own a share
-limited equity
-tax benefits related to ownership
-difficulty in obtaining mortgage
-rent increases to cover maintenance costs of empty units
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Condominiums
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-residents have sole ownership of the living space but joint ownership of the land and common areas
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Advantages of condos
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-less exterior maintenance and repairs
-often more reasonably priced
-may have higher security
-more amenities
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Disadvantages of condos
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-responsibility for condo association fee
-less privacy
-hard to sell
-only own from interior walls inward
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Apartments
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-multi-unit developments
-rental properties
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Advantages of an apartment
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-mobility
-no liability for mortgage
-no down payment
-no responsibilities for repairs and maintenance
-no property taxes
-no responsibility for vacancies
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Disadvantages of apartments
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-limited remodeling
-limited lifestyle choices
-less privacy
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HACE 2100: Exam # 3