| Term |
Definition |
|
1 year adjustable (ARM)
|
A loan with a fixed rate for the first 1 year that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 1 year, the monthly
payment may also change.
|
|
10 year adjustable (ARM)
|
A loan with a fixed rate for the first 10 years that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 10 years, the monthly
payment may also change.
|
|
2 year adjustable (ARM)
|
A loan with a fixed rate for the first 2 years that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 2 years, the monthly
payment may also change.
|
|
3 year adjustable (ARM)
|
A loan with a fixed rate for the first 3 years that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 3 years, the monthly
payment may also change.
|
|
5 year adjustable (ARM)
|
A loan with a fixed rate for the first 5 years that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 5 years, the monthly
payment may also change.
|
|
7 year adjustable (ARM)
|
A loan with a fixed rate for the first 7 years that has a rate that
changes once each year for the remaining life of the loan. Because
the interest rate can change after the first 7 years, the monthly
payment may also change.
|
|
Abstract (of Title)
|
A summary of the public records relating to the title to a
particular piece of land. If there are any title defects they must be
cleared before a buyer can purchase clear, marketable, and insurable
title.
|
|
Acceleration Clause
|
Allows the lender to speed up the rate at which your loan comes due or
even to demand immediate payment of the entire balance of the loan should you default
on you loan.
|
|
Accrued Interest
|
Interest that has accumulated from one payment-due date to the next.
Also, the total amount of interest paid on a loan over time
|
|
Acquisition Fee
|
A fee charged by a dealer to begin a lease. Also known as a bank fee if the
lessor is a bank, or an initiation fee. Acquisition fees start at about
$300 and are seldom negotiable.
|
|
Add-Ons
|
Products or services added by dealerships. Common examples are pinstriping,
rustproofing, alarm systems, electronic equipment, and extended warranties.
Add-ons can really drive up the sticker price of a vehicle, but their actual
cost is usually negotiable.
|
|
Adjustable Rate Mortgage (ARM)
|
A mortgage in which the interest rate is adjusted periodically based
on an index. Also known as the renegotiable rate mortgage, the variable rate
mortgage or the Canadian rollover mortgage.
|
|
Adjustment Interval
|
On an adjustable rate mortgage, the time between changes in the
interest rate and/or monthly payment, usually one, three or five years.
|
|
Advertising Fee
|
An amount charged the buyer to cover the cost of national and local advertising.
Many experts suggest that this fee should be no more than 1.5 percent of the
manufacturer's suggested retail price (MSRP).
|
|
Affiliate
|
An entity related to a Seller that is subject to common operating
control and that is operated as part of the same system or enterprise.
The Seller typically owns less than a majority of the voting stock or
the Seller and the entity are subsidiaries of a third party.
|
|
Affordable Gold 5
|
Mortgage with less than or equal to 95 percent LTV, when at least 5
percent of the downpayment comes from the borrower's personal cash.
|
|
Affordable Gold 97
|
Mortgage with greater than 95 percent loan-to-value (LTV) ratio but less
than or equal to 97 percent LTV, when at least 3 percent of the
downpayment comes from the borrower's personal cash.
|
|
Affordable Product Type
|
Choice of loan determined under the Affordable Gold program.
Indicates whether to submit the loan under the Affordable Gold
program and, if so, which type of program.
|
|
Affordable Seconds
|
Subsidized secondary financing or other financial assistance provided
under an established, documented secondary financing or financial
assistance program that has formal procedures in place to provide
applicant qualification, loan processing, and loan program administration
on an ongoing basis.
|
|
Agreement of Sale
|
Known by various names, such as contract of purchase, purchase
agreement, or sales agreement according to location or jurisdiction. A contract in which a seller
agrees to sell and a buyer agrees to buy, under specific terms spelled out
in writing and signed by both parties.
|
|
Amortization
|
The gradual reduction of a debt by periodic payments of interest and principal
that are large enough to pay off a loan at maturity. The loan is repaid
through regular, monthly payments of principal and interest paid for a
predetermined amount of time.
|
|
Amount Financed
|
The part of a vehicle's cost that a lender supplies. To determine the amount
financed, multiply the purchase price by the interest rate; subtract that
amount from the purchase price; add state purchase tax to that remainder;
then subtract the down payment. Put differently, AF = purchase price -
(purchase price X interest rate) + tax - down payment.
|
|
Annual Percentage Rate (APR)
|
The annual cost of a loan to a borrower.
Like an interest rate, the APR is expressed as a percentage of the loan amount.
Unlike an interest rate, however, it includes other charges or fees to reflect
the total cost of the loan. The Federal Truth in Lending Act requires that every
consumer loan agreement disclose the APR in large, bold print. Since all lenders
must follow the same rules to ensure the accuracy of the APR, borrowers can use
the APR as a good basis for comparing the cost of loans.
|
|
Application
|
AA written statement of personal and financial information that is required
to approve a loan. Note that application fees are usually required for home
loans but not for auto loans.
|
|
Appraisal
|
A written analysis of the estimated value of a property, as prepared
by a qualified appraiser. A fee is typically charged for a real estate
appraisal because a home appraisal is time-consuming. An appraisal of an
auto is usually not necessary because auto dealers, sellers and buyers
all have quick access to the market value of autos.
|
|
Appraisal Fee
|
The charge for estimating the value of property.
|
|
Appraiser network
|
Group of licensed/certified individuals or entities contracted to
perform property value assessments.
|
|
Assessment Report
|
Report that appraisers use to record property values, marketability
analyses and any pertinent comments regarding the subject property.
Assessment reports are classified as appraisal reports or inspection reports.
|
|
Assessment Upgrade
|
Approved recommendation from an appraiser that you must use a more
comprehensive type of assessment. An example of an upgrade recommendation
includes any adverse/atypical findings or other atypical property or
neighborhood condition observed by the appraiser. You must also upgrade
an assessment when its value does not support the loan transaction; the
appraiser is unable to view the subject property from the public street;
the assessment is "subject to" completion; or repair or property rights
are leasehold.
|
|
Asset
|
Anything that has monetary or exchange value that is owned by an individual,
business or institution. Assets include real estate property, personal
property, vehicles and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on).
A lender is very interested in the amount and value of any assets you may
have because assets can be used as collateral against a loan.
Along with other factors such a a borrower's credit rating, assets are
also used to help determine the amount of the loan.
|
|
Assumable Mortgage
|
An assumable mortgage is a mortgage that allows you to take over a mortgage
on a home you are buying or allows a buyer to take over your mortgage if you
are selling your house. The advantage of this is that you assume a mortgage
that has a lower interest rate than current rates, and you avoid high closing
costs.
|
|
Assumption
|
The agreement between buyer and seller where the buyer takes over the
payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money
since this is an existing mortgage debt.
|
|
Automated Underwriting
|
Automated underwriting is used to offer instant decisioning regarding your
loan request. Automated underwriting is similar to instant offer service.
You are usually required to provide additional information to the lender to
close your loan.
|
