The following list represents common loan terms used by a variety of lenders in paperwork, contracts, advertising and loan agreements. The best advice is be sure to ask questions, and keep asking until you understand in your own terms the financial obligation and offers you are being presented.

*Amortization- The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.
•APR – The cost of a loan stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee
•Bond – An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.
•Cap – A provision of an adjustable-rate mortgage that limits how much the interest rate or mortgage payments may increase or decrease, There are typically initial, periodic and lifetime cap’s on a loan, refer to the note for clarification.
•Finance Charge – The cost of interest and other charges involved in borrowing money.
•Fixed Rate – Legal agreement between the borrower and lender that the rate of interest is fixed on the specificied loan amount.
•Foreclosure – Forefiture of a property bank to the lender for failing to make payments.
•Good Faith Estimate – Estimate of costs and fees for a borrower on a loan.
•Index – The economic index is an agreed upon index used to determine your interest rate (libor, prime, etc).
•Interest – The amount paid for the use of money, usually expressed as an annual percentage.
•Interest Rate – The interest charged by a lender for the use of money, expressed as a percentage. •Jumbo Loan ~ A loan with a dollar amount that exceeds the statutory size limit purchase by Fannie Mae or Freddie Mac, presently $ 417,000
•LIBOR (London Inter Bank Offer Rate) ~ An interest rate charged among banks in London for short-term loans denominated in a specific currency. A common index for debt securities.
•Lien – A monetary claim against your property. Usually liens must be settled before the seller can take title.
•Line of Credit – Type of loan in which the borrower may draw on funds at any time, up to an established maximum limit; the borrower may borrow, repay, and borrow again, any and all of the credit extended; a revolving loan.
•Margin – Percentage added to the index by the lender to determine the interest rate.
•Maturity Date – The date that a loan is due in full.
•Note – A signed document often referred to as a promisory note, whereas a borrower agrees to repay a lender based on specific terms.
•Prime Rate – The most favorable interest rate charged by a commercial bank for short term loans; a benchmark from which a bank computes an appropriate rate of interest for a loan contract.
•Principal – The balance on the loan amount, excluding interest.
•Rate Adjustment Period – With most ARMs, any periodic adjustment in the interest rate changes the payment. Adjustment periods tend to reflect the period of the index of the most popular ARMs.
•Rate Cap – Consumer safeguards that protect the interest rate during the application and processing period.
•Refinance – The repayment of a debt from the proceeds of a new loan using the same property as security, most common in mortgages, business, comercial and vehicle loans.
•Term – The period of time during which a loan is repaid.
•Title – The right to ownership in real estate or with a vehicle which is recorded with a local government entity.

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