e-wisdom.com glossary » Loans

ARM

e-wisdom.com editors — Thu, 10 Sep 2009 03:25:40 +0000

Adjustable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a specified index. Also known as a renegotiable rate mortgage and a variable rate mortgage.

Amortization

e-wisdom.com editors — Thu, 10 Sep 2009 03:25:30 +0000

Making payments on debts in segments over a set period of time. A portion of each payment goes toward principal and a portion goes toward interest.

APR

e-wisdom.com editors — Thu, 10 Sep 2009 03:24:40 +0000

Annual Percentage Rate. The yearly percentage rate imposed on the balance of a loan.

Appreciation

e-wisdom.com editors — Thu, 10 Sep 2009 03:24:29 +0000

When an asset increases in value over time. The opposite of depreciation.

Assets

e-wisdom.com editors — Thu, 10 Sep 2009 03:24:17 +0000

Anything of value. Any interest in real or personal property.

Assumable Mortgage

e-wisdom.com editors — Thu, 10 Sep 2009 03:24:04 +0000

A mortgage that can be taken over (”assumed”) by the buyer when a home is sold.

Balloon Loan

e-wisdom.com editors — Thu, 10 Sep 2009 03:23:50 +0000

Unlike an amortized loan, which pays off the principal completely at the end of the loan, a balloon loan leaves a large amount of principal unpaid. Often, consumers refinance the balloon amount.

Balloon Mortgage

e-wisdom.com editors — Thu, 10 Sep 2009 03:23:38 +0000

A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

Balloon Payment

e-wisdom.com editors — Thu, 10 Sep 2009 03:23:24 +0000

The large payment left at the end of a balloon loan.

Bank Draft

e-wisdom.com editors — Thu, 10 Sep 2009 03:23:07 +0000

A payment method where your loan payment is automatically deducted from your bank account. This way, you don’t have to mail in your payment each month.