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Basics Beginner: Financing a Major Purchase

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1.
One advantage of using a home equity line of credit to finance a major purchase is that the interest paid may be tax-deductible.
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True. Check the details to be sure, but tax deductibility is common.
2.
Which of the following statements is true?
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A money market fund is a good savings vehicle for a major purchase. Money market funds are safe, conservative investments that can be accessed quickly, using a check. All of the other answers are false.
3.
A home equity line of credit is the same thing as a second mortgage.
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False. The two are different. The former involves a revolving line of credit, while the latter involves a fixed amount of money repaid over a fixed period.
4.
How does an automatic savings program work?
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Money is withdrawn on a regular basis from an existing account and transferred to another account. The process is automatic, which makes it relatively easy for you.
5.
A major purchase is a _______ expense.
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Variable. It is variable because you dont normally buy it on a regular basis.