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Funds Management & Loan Categories


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Adjustable rate mortgage
a mortgage with changing interest rate
Asset-based lending
loan secured with the assets of a business
Balloon mortgage
a mortgage in which the entire remaining balance of the loan is due in one single payment
Commercial lending
loans to business enterprises
Consumer reporting agency (CRA)
company that compiles and sells credit records
Credit worthiness
a creditor's measure of an individual's or company's ability to meet debt obligations
Debt ratio
total obligations compared to total income
Debt service coverage ratio
comparison of net operating income to the total cost of debt
Equal Credit Opportunity Act
prohibits the use of race, color, religion, national origin, marital status, age, receipt of public assistance, or exercise of any consumer right against a lender as a factor in determining creditworthiness
Escrow
when something of value is put in the care of a third party until certain conditions are fulfilled, as a deed, money, etc.
Factoring
a form of lending that advances cash in exchange for a business's receivables
Fair Credit Reporting act
guarantees consumers the right to review and dispute information in the reports
Fair Debit Collection Practices Act
protects consumers from unfair collection techniques
Fair, Isaac and Company, Inc. (FICO)
score-a three-digit number that credit granters can use in making a loan-approval decision
conventional mortgage
Fixed rate mortgage
Foreclosure
when the mortgage is not paid, the creditor seeks a court-ordered sale of the property
Grace Period
Period of time during which the balance on a credit card may be paid in full avoid finance charges
Installment Loan
A loan where you borrow a set amount of money and repay it plus finance charges in a series of scheduled payments
Lien
A claim upon property to satisfy debt
Line of credit
an arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period (credit line)
Loan-to-value-ratio
amount of loan divided by the property value
Mortgage
Loan to finance the purchase of real estate with specified payments and interest rates
PITI
principal, interest, taxes, and insurance
Point
a value equal to 1 percent of loan principal
Redlining
discriminatory act whereby banks refuse to lend to residents in certain neighborhoods
Reverse mortgage
form of a consumer loan tied to the appreciated value of a property
Secured loan
a loan in which some item of value backs the loan in case the borrower defaults on the loan
Shared appreciation mortgage
form of consumer lending that may lower rate for borrower who agrees to share the property's appreciation with the lender
Short-term loan
financing for a year or less
Small Business Administration (SBA)
agency that offers financial, technical, and management programs to help businesses
Subprime rate
rate that is higher than normal to offset the increased risk represented by a less-than-perfect borrower
Term Loan
between a firm and financial institution on which the borrower agrees to make a series of payments consisting of interes
Truth in Lending Act
guarantees that all information about costs of a loan is provided in writing
underwriting
guaranteeing prices on securities to corporations and then selling the securities to the public
Unsecured loan
loan backed by only the reputation and creditworthiness of the borrower