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Glossary of Bank Terms in Pittsburgh and Cleveland

From Equity to LTV, you can use our glossary at any time for a better understanding of each term. Click on a bar below to view terms alphabetically within each category.

 

Adjustable Rate Loan
A type of loan with an interest rate which changes periodically as determined by a financial index. The repayment period may increase or decrease when the index increases or decreases. Most adjustable rate loans have "caps" or ceilings limiting interest rate increases or decreases.
Amortization
The repayment of debt through a series of payments called installments.
Annual Percentage Rate (APR)
The APR is intended to reflect the various costs associated with a loan in addition to interest. The APR represents fees, costs and interest as required by the federal Truth in Lending Act.
Appraisal
A report created by a licensed professional that estimates the fair and reasonable market value of the subject property.
Assessment of Assessed Value
The value placed on a property by the taxing authority which is used to determine the amount of property taxes that must be paid. This value is frequently used in lieu of an appraisal to determine the reasonable market value of the subject property.
Blended Rate
This rate is used for home equity adjustable rate term loans and is the rate used to calculate the monthly payment which will amortize the loan at a specified term when changes to the rate (moving from a fixed rate to a variable rate) are taken into consideration.
Cap (Annual & Lifetime)
The provision in an adjustable rate loan or variable rate line of credit limiting the range an interest rate can change during a given time period. There are usually two types of caps used to determine the interest rate range of an adjustable rate loan, annual and lifetime. For example, the annual cap of an adjustable rate loan might be 2% with a lifetime cap of 4%. This means that during an adjustable rate period, a loan with a beginning interest rate of 7% could increase a maximum of 2%, (up to 9% in this example) and, during the life of the loan, it could have a maximum interest rate of 11%.
Closing Costs
An amount charged tot he borrower to cover the lender's costs on a home equity loan.
Co-Borrower
An individual entity signing a legal document on an equal basis with other signer(s) who is then jointly liable with the other signers or borrowers for repayment of debt.
Comparables
Properties of similar build and with similar amenities used to determine the value of a property by an appraiser. Often these properties are in the same neighborhood as the subject property and have been recently appraised.
Condominium
A type of property ownership in which the interior space of each unit is individually owned. Common areas, including land and amenities such as pools, tennis courts, and clubhouses are owned in common with the other unit owners.
Credit Report
A listing of an individual's credit history used by a lender to determine the probability of the applicant to repay debt.
Debt to Income Ratio
An indicator of the borroweris ability to take on debt, this ratio is the relationship between your monthly income before taxes and the amount of your minimum monthly debt payments.
Deed
A legal document that provides evidence of ownership for real estate.
Down Payment
The amount of the purchase price of the item that is not financed by the loan. This is equal to the sales price minus the loan amount.

 

Equal Credit Oppurtunity Act (ECOA)
Federal law that requires lenders to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.
Equity
The difference between the maket value of the property and the amount still owed on the mortgage or mortgages. This also represents a homeowner's financial interest in a property.
Fair Credit Reporting Act
A consumer protection law regulating the disclosure of consumer credit reports by credit reporting agencies and establishing procedures for correcting mistakes on credit reports.
Fixed Rate Loan
A loan in which the interest rate is fixed for the entire term of the loan. This translates into a fixed payment for the entire term of the loan.
Formula Rate
This rate is used for variable rate lines of credit and adjustable rate term loans, the resulting rate is from the addition of the index rate and the margin.
Good Faith Estimate (GFE)
This document is an estimate of the fees that you will be required to pay at closing and is required to be sent from the lender to the prospective borrower.
HUD
An acronym for the U.S. Department of Housing and Urban Development.
HUD-1A
A HUD-1A is a settlement statement used for a refinancing transaction where there is no seller.
Interest
The fee charged by the lender for money borrowed.
Interest Rate
A percentage, which is expressed as an annual rate and applied to the loan amount for the use of funds.
Introductory Rate
This rate is used for home equity and variable rate loans and adjustable rate lines of credit and is a discretionary rate, not based on an index or margin, fixed for a set term at the beginning of the loan.
Line of Credit (LOC)
A loan with an option to borrow again and again as needed over time up to a specified limit. The borrower agrees to repay the money with interest through monthly payments.
Loan-to-Value (LTV)
Expressed as a percentage, this shows the total of all loans or mortgages against a property. The principal balance of all mortgages on the property (including second or third mortgages) is divided by the appraised value of the property.

 

Mortgage (Deed of Trust)
A legal document that pledges a property to the lender as security for payment of the loan.
Note
A legal document specifying the terms of debt including the amount to be paid, when installments are due and the term of the loan.
Origination Fee
A fee charged to the borrower to cover the lender's costs for creating the loan.
Principal
The amount of money borrowed as evidenced by the note. The pricipal will decline as timely payments are made.
Right of Recission
A period of three business days after the loan closing in which the borrower may cancel an owner occupied real estate transaction.
Secured Loan
The borrower provides "security" that the loan will be repaid according to the agreed terms and conditions in the form of collateral (e.g house, car, etc.). In the event the borrower is unable to repay a secured loan, the lender may be able to sell the collateral to pay off all or part of the loan.
Term Loan
A one time borrowing option in which a lender gives money to a borrower, and the borrower agrees to repay the money with interest through monthly payments.
Title
A document conveying legal ownership to a property.
Truth in Lending Act
A federal law requiring lenders to fully disclose, in writing, the terms and conditions of a loan, including the Annual Percentage Rate (APR) and all other charges that are associate dwith producing the loan.
Unsecured Loan
A loan not secured by specific collateral but by the income and creditworthiness of the borrower.
Variable Rate Line of Credit
A loan with an option to borrow again and again as needed over time up to a specific limit, featuring an interest rate that changes periodically in relation to an index. Payments may increase or decrease when the index increases or decreases.
Variable Rate Loan
A one time borrowing option with an interest rate that adjusts periodically usually based on a standard market rate. The repayment period may increase or decrease when the index increases or decreases. These rates often have a specified floor and/or ceiling, called a cap, which limits the adjustment.
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