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Acceleration Clause
A term in a mortgage agreement that requires the borrower to pay off the loan immediately under certain conditions.
Accounts Receivable Financing
Accounts receivable financing, also known as “factoring,” is a practice in which a business sells its invoices to a third-party financial company to collect upon.

 

Accrued Interest
The amount of mortgage interest that has been earned but not yet paid.

 

Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that can change during the term of the loan. The timing and calculation of adjustments (also called resets) are determined by the loan program, and these details are disclosed in the mortgage documents.

 

Adjustment Interval
The time between interest rate adjustments of an adjustable rate mortgage (ARM).

 

Amortization
Amortization is the gradual reduction of a debt by regular scheduled payments of interest and principal.

 

Amount Owed On Trade
If your current car is not paid off, the dealership will look at the amount you currently owe on the car.

 

Annual Fee
A credit card issuer may charge you a fee each year for your account.

 

Annual Income
This is the combined annual income for you and your co-borrower.

 

Annual Percentage Rate
The cost of credit, including the interest and fees, expressed as an interest rate. APR was created to make it easier for consumers to compare loans with different rates and costs, and by law it must be disclosed in all advertising.

 

Appraisal
A written estimate of the value of real or personal property prepared by a qualified appraiser. Mortgage lenders almost always require a property appraisal before approving a home loan.

 

Appreciation
Added value to real estate or other assets that is the result of increasing prices.

 

Asking Price
The price requested by a seller when a home or property is listed for sale. This amount is often open to negotiation.

 

Assumable Mortgage
A mortgage that may be “taken over” by a qualified third party. Most assumable mortgages are government-backed products like VA, FHA and USDA home loans.

 

Assumption Approval Clause
A clause informing borrowers that they cannot assume a home loan without agency approval.

 

Assumption Indemnity Clause
A clause informing buyers that they must agree to assume all of the obligations of the original borrower under the terms of the instruments creating and securing the loan.

Auto RefinanceAn auto refinance is the process of applying for a new auto loan to pay off your existing auto loan, hopefully with a better interest rate and better terms.

Balloon Mortgage
A balloon mortgage is usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a specific time.

 

Bankruptcy
A proceeding in a federal court in which a borrower who owes more than his or her assets, can relieve the debts by transferring his or her assets to a trustee. Different chapters or types of bankruptcy exist. If a person files bankruptcy, a record of the filing appears on the borrower’s credit report for up to 10 years.

 

Bidding War
A process in which two or more parties attempt to get their offer accepted by a seller, usually by making repeated offers at higher amounts.

 

Borrower
A borrower is a buyer who does not pay cash, but instead finances some or all of a purchase.

 

Break-Even Point
The break-even point is the point at which the monthly savings created by a mortgage refinance offsets the cost of refinancing. It can also refer to the point at which the savings generated by paying discount points covers the cost of those points.

 

Bridge Loan
A bridge loan is a short-term loan designed to cover the time it takes a borrower to secure permanent financing or remove an existing obligation.

 

Broker
An individual who arranges financing or negotiates a contract on a client’s behalf and earns a commission for doing so.

 

Business Acquisition
A business acquisition is a transaction in which a company buys most (if not all) of another company’s ownership stakes in order to assume control of that company.

 

Business Capital
Business capital refers to the financial assets needed for a business to produce the goods and/or services it offers to its customers. Capital is necessary for a business to maintain its operations.

 

Business Certificate Of Deposit
A business certificate of deposit (CD) is issued when a business chooses to deposit money in a commercial bank for a specified length of time in order to earn interest on the sum deposited.

 

Business Credit
Business credit is a way for potential lenders, vendors, suppliers, and others to evaluate a business’ creditworthiness.

 

Business Credit Card
A business credit card is a credit card issued by a financial institution to a business so that it may borrow funds when making purchases.

 

Business Goodwill
Business goodwill is an accounting term that signifies a business’ intangible assets, such as a company’s brand name, loyal customer base, good public reputation, patents, and proprietary processes and technologies. This is opposed to tangible assets, such as real estate or equipment.

 

Business Mortgage
A business mortgage is also known as a commercial mortgage. It is a mortgage loan taken out on a commercial property like an office building, warehouse, or shopping center.

 

Buydown
A buydown is a financing technique in which money is paid upfront to temporarily reduce a loan’s interest rate and lower the payment.

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