Lending Decisions Vocabulary

Question	Answer
Loan	a thing that is borrowed, especially a sum of money that is expected to be paid back with interest
Principal	denoting an original sum invested or lent
Interest	money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt
Amortization	a period in which a debt is reduced or paid off by regular payments
Credit Score	a number assigned to a person that indicates to lenders their capacity to repay a loan
Mortgage	legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt
Mortgage Insurance	an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan
Truth in Lending Act of 1968	US federal law designed to promote the informed use of consumer credit, requiring disclosures about terms & cost to standardize the manner in which costs associated with borrowing are calculated and disclosed
Collateral	something pledged as security for repayment of a loan, to be forfeited in the event of a default
APR	expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction but does not take compounding into account

Resource summary

	Created by Shannon Anderson-Rush almost 5 years ago