Financing/Loan Terminology

Loan terminology for understanding Apply for the right mortgage or home refinance loan. Debt consolidation loans available below.
	Your credit history is:			Mortgage/Refinance mainly for use by people with:
	Excellent - None			poor or no credit history, other credit welcome.
	Excellent - Poor			poor credit history, other credit welcome.
	Excellent - Average			average to excellent credit history.
	Excellent - Good			good to excellent credit history.
	Excellent			excellent credit history.
	Full credit range			Loans tailored to credit history.

Appraisal

An evaluation of what a particular property in question is worth at a specific time or date.

APR

Acronym for “Annual Percentage Rate”. A yearly rate of interest on a loan.

Balloon Note

An amount left over after the term of the loan is past. The amount still owed on the property bought—a lump sum of money owed at the end of a loan.

Bankruptcy

A legal ruling where a person is said to be so far in debt that they cannot possibly cover their own existing loans nor can they earn enough to keep up with the payments. Whatever property that has a lien on it is then taken by the creditors (repossession or foreclosure) and usually sold to help recover the loss of what would have normally been paid by the person taking on the debt.

Base Price

The cost of a car with only the standard equipment, factory warranty, and destination charge.

Credit

Your history of handling financial obligations and banking accounts.

Deed

A document that names you as the legal holder of the property in question.

Equity

The value of your property minus the debt owed for it.

Foreclosure

Bank or lender takes possession of your property used as collateral due to non-payment of a previously secured loan.

Gross Income

The total amount that you earn at your place of employment. If self-employed, the amount left over after your expenses are subtracted from total brought in via your business.

Home Equity Line
of Credit

The amount determined by the lending institution that can be borrowed against your current home minus the balance owed for the home.

Home Equity Loan

A loan taken out that is usually in the amount equal to or less than the amount of the home's worth minus the first mortgage amount still owed on the house. The lender then becomes temporary part owner of the home until the equity loan is paid off. Equity loans are tax deductible which is favorable and recommended over a regular loan taken out directly for some purchase such as a car or other type of major debt.

Interest Rate

The percentage of a sum of money charged for its use.

Lien

The act by which a creditor obtains the rights to hold onto or sell property owned by the person in the event that the person lending money defaults on his/her loan payment agreements.

Lock (locked) or Lock In

A guaranteed period of time where the APR of a loan is kept at the rate promised by the bank or lender until the loan is secured by the person taking the loan.

Manufacturer's Rebate

Money offered towards the cost of a car that comes from the auto manufacturer. An incentive used to move slow selling cars or cars that are to be soon replaced by next year's model.

Monroney Sticker Price

A federal law requirement that the price that applies to the specified car be labeled as having a described cost and applied to the car window. It shows the base price, the manufacturer's installed options, fuel efficiency, the manufacturer's suggested retail price (MSRP), destination charge (the cost to ship from the manufacturer's location to dealership).

Mortgage

The act of trading the home to the lending institution to secure a home loan. Once the loan is completely paid back, the lender is to release the home back to the person taking out the loan. Usually this is accomplished with the lender returning the deed to the house.

Mortgagee

The person taking the mortgage and making payments with interest.

Mortgagor

Legal lender that finances property.

Refinance

To finance again under a new agreement which is usually for a lower interest charge (or APR).

Term

Indicates the period of time that it will take to pay off the loan and is usually expressed in months or years of time. Car loans generally fall into 24, 36, 48, and 60 month periods.

Title

A legal document that states that you have the right of ownership of a car.

Trade-in Value

The amount a dealership evaluates as to your car's worth. That amount is then subtracted from the total cost of the replacement car or truck and covers partial or full payment for that vehicle.

Underwriting

Processing the paperwork and verifying your credit history for the purpose of approving your loan.

Upfront Costs

Fees collected when a loan is processed and generally approved. Sometimes the fees reduce the amount of interest paid such as when you pay points on a mortgage, etc.

Upside-down

When the value of a vehicle is lower than the outstanding balance of the loan secured by the vehicle.

Waive

To give up a claim or right voluntarily.

Waiver

The act of signing a legal document to release an entity from legal obligations or charges.