Glossary A to Z

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  • Accrued Interest
    The amount of interest that has accumulated from one payment date to the next.
  • Adjustable Rate Mortgage (ARM)
    A mortgage where the interest date varies periodically based on a specific market index.
  • Amortization
    The periodic reduction of a loan's principle over the course of its life.
  • Annual Percentage Rate (APR)
    What a loan costs the borrower per year, represented as a percentage of the loan.
  • Appraisal
    An analysis of a property's value at a given time, carried out by a team of appraisers.
  • Appraisal Fee
    The fee paid to a group of appraisers to value a given property.
  • Auto Loan
    A type of personal loan used to purchase an automobile.
  • Bad Credit
    Refers to a credit history that shows proof of late payments or financial issues.
  • Balloon Mortgage
    A short-term loan with a fixed rate that involves small payments at the beginning and larger payments later.
  • Balloon Payment
    A kind of repayment where only the interest is paid initially, with the outstanding principal sum paid at the end.
  • Bank
    A financial institution usually licensed to give out loans.
  • Bankruptcy
    A court procedure in which a borrower relieves their debt by transferring their assets.
  • Borrower
    A person who chooses to borrow money so as to pay for an expense.
  • Break-Even Point
    The point reached after refinancing a home loan when a homeowner begins to save money.
  • Bridge Loan
    As short-term loan that covers the period between when a home is sold and one is bought.
  • Capital
    The financial resources available to be used as an initial investment.
  • Co-signer
    A third-party who, upon signing, assumes equal liability for the loan.
  • Collateral
    An asset pledged as security for the repayment of a loan.
  • Consolidating Debt
    Combining the outstanding balances of several different debts into a single new loan, typically at a better rate.
  • Conventional Loan
    A typically fixed-rate loan that is not guaranteed or insured by a government agency.
  • Credit
    The amount of money that is given by a creditor to a borrower to pay back in the future.
  • Credit Card
    A card allows a consumer to pay for goods or services on credit.
  • Credit Check
    A financial check performed to analyze a loan applicant's credit history.
  • Credit History
    The record that is kept on how effectively a person meets their repayments.
  • Credit Rating
    An assessment of a borrower's ability to repay a loan.
  • Credit Report
    The record of a given borrower's past repayments.
  • Credit Score
    The number calculated by a statistical system that rates loan applicants depending on their creditworthiness.
  • Credit Union
    A non-profit cooperative institution whose members can borrow money.
  • Creditworthiness
    A borrower's trustworthiness given their credit history.
  • Dealership Financing
    Loans that are given by a retailer to a customer and then sold to a financial institution.
  • Debt
    The amount of money owed by a person or business to a lender or other financial institution.
  • Debt Consolidation
    Combining the outstanding balances of several different debts into a single new loan, typically at a better rate.
  • Debt Financing
    The money that as borrowed in order to run a business.
  • Default
    The failure to repay or meet the terms of a loan.
  • Deferment
    The postponing of repayment to a later date for a specific reason.
  • Direct Lending
    A loan that is made available directly to a borrower from the lending institution.
  • Direct Loan
    A loan that is taken out directly from a financial institution.
  • Direct-debit
    An arrangement where repayments will be taken from a borrower's account on given dates.
  • Down Payment
    The difference between the amount of the loan and the purchase price, typically paid upon receiving the loan.
  • Equity
    The difference between the market value of a property and the outstanding balance.
  • Equity Financing
    The process of raising capital by selling ownership.
  • Federal Student Loan
    A student loan that is subsidized by the federal government.
  • FHA Loan
    A home loan backed by the Federal Housing Administration.
  • Fixed Interest Rate
    An interest rate that remains frozen for the duration of the loan.
  • Fixed Rate Mortgage (FRM)
    A kind of mortgage where the interest rate is frozen for the duration of the loan.
  • Foreclosure
    The proceedings initiated by a lender to reclaim collateral upon a borrower defaulting on a loan.
  • Home Equity
    The difference between the market value of a property and the outstanding balance.
  • Home Equity Line of Credit (HELOC)
    A kind of financing secured using equity that provides the borrower with a line of credit.
  • Home Equity Loan
    Usually a secondary loan in which the borrower may secure funds using the value of their home equity.
  • Home Loan
    A loan given from a lender to a borrower in order to purchase a house or property.
  • Homeowner
    A person who is the legal owner of a house or property.
  • Hybrid Home Loan
    A breed of adjustable-rate home loan where the interest rate remains frozen for an initial period.
  • Index
    A published rate that lenders use to alter the rates on adjustable-rate mortgages.
  • Indirect Lending
    The giving of a loan through a third party or financial intermediary.
  • Indirect Loan
    A loan that is given to a borrower through a financial intermediary.
  • Inflation
  • Installment
    A sum of money that is one of several repayments spread out over a period of time.
  • Interest
    What it costs a person to borrow money.
  • Interest Rate
    The percentage of a loan that will be paid annually by the borrower as the interest.
  • Interest-only Mortgage
    A kind of loan where, for a period, the borrower pays just the interest.
  • Jumbo Loan
    A loan that exceeds the conforming limits of most conventional loans.
  • Late Payment
    A repayment that was fulfilled later than the agreed date.
  • Lender
    An institution that allows people to borrow money and pay it back at a future date.
  • Line of Credit
    An account of revolving credit that allows you to borrow money as long as you stay within your limits.
  • Loan Terms
    The details shared and agreed upon between a lender and a borrower.
  • Loan-to-Value Ratio (LTV)
    The ratio between the amount of a home loan and the value of the property in question.
  • Lock In
    The process of freezing the rate on a loan, protecting the borrower against fluctuating interest rates.
  • Monthly Payment
    An sum that is due as repayment once every month.
  • Mortgage
    The legal agreement in which a person borrows money in order to purchase a property.
  • Payday Loan
    A short-term loan that is taken out to cover emergency expenses and is due on the borrower's next payday.
  • Personal Loan
    A loan taken out by an individual that does not usually involve any collateral.
  • PLUS Loan
    An unsubsidized student loan that is offered to the parents of the enrolled student.
  • Pre-approval
    The agreement on principle between a lender and a borrower.
  • Pre-Approved Loan
    A loan issued by a lender before a purchase, in which the approval process is waived.
  • Predatory Lending
    The fraudulent or unfair practice of some lenders to take advantage of weak borrowers.
  • Prepayment
    The paying off of a loan before the agreed due date.
  • Principal
    The amount that is borrowed or still owed on a loan, minus the interest.
  • Private Lender
    A private rather than government institution that provides loans.
  • Private Student Loan
    A student loan provided by a private institution.
  • Qualification
    The process used by a lender to determine if a potential borrower has the credentials required to receive a loan.
  • Quotation
    A formal initial statement that estimates the details and cost of a loan.
  • Rate
    The given interest on a loan, referred to as the interest rate or the annual percentage rate.
  • Refinancing
    The process where a borrower acquires a new loan with new terms, using the new loan to pay off the old one.
  • Repayment
    The paying off of a loan by a borrower, usually over a set period.
  • SBA Loan
    A loan provided by the Small Business Administration in order to fund a business.
  • Secured Debt
    Debt that is secured by assets or collateral that the lender will then seize should the borrower default on the loan..
  • Secured Loan
    A loan that is tied to collateral that will then be seized upon a borrower defaulting on the loan.
  • Settlement
    The agreement between the buyer, seller and lender in which the property and funds are allocated legally.
  • Small Business Loan
    A loan that is take out specifically to finance a small business.
  • Student Loan
    A loan that is taken out specifically to cover the cost of a student's higher education.
  • Subsidized
    Refers to a loan that is financially supported by the government.
  • Term
    The period of time between when a loan is started and when the balance of the loan is due to be paid.
  • Title
    An official document that denotes an individual's ownership of a property.
  • Title Loan
    A loan in which the borrower uses the ownership of their vehicle as collateral.
  • Unsecured Debt
    Debt that is not backed up by collateral that can be then claimed should the borrower default on the loan.
  • Unsecured Loan
    A loan in which the borrower provides no collateral that the lender can then claim in the event of a default.
  • Variable Interest Rate
    An interest rate that fluctuates over the course of a loan depending on a financial index.

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