| Definitions |
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| Loan amount |
The total amount for this loan. |
| Interest rate |
The interest rate on this loan. |
| Loan term |
The number of years over which you will repay this
loan. The most common terms are 15 years and 30 years.
If this loan has a balloon payment, this will be shorter
than the number of years to amortize the loan. For example,
a loan with a 5 year term amortized over 30 years will
have the same monthly payment as a 30 year loan with
the same interest rate. The difference is the 30 year
loan will have equal payments for 30 years. The 5 year
loan will have equal payments for 5 years and then a
very large, or balloon, payment for the remaining balance.
|
| Amortization |
The number of years used in calculating the monthly
payment. Loans that are amortized over a longer period
than their loan term have a balloon payment. See "Loan
term" for more information. |
| Origination fee |
The amount charged as a loan origination fee which
is included in the APR calculation. For many loans a
1% origination fee is common. For example, a 1% fee
on a $120,000 loan would cost $1,200. |
| Commitment fee |
An upfront fee included in the APR calculation. |
| Other fees |
Any other fees that should be included in the APR
calculation. These fees can vary by lender, but at a
minimum usually includes prepaid interest. |
| Other costs |
Any other costs that should be included in the APR
calculation. |
| Monthly loan payment |
Monthly principal and interest payment (PI). |
| Annual percentage rate (APR) |
A standard calculation used by lenders. It is designed
to help borrowers compare different loan options. For
example, a loan with a lower stated interest rate may
be a bad value if its fees are too high. Likewise, a
loan with a higher stated rate with very low fees could
be an exceptional value. APR calculations incorporate
these fees into a single rate. You can then compare
loans with different fees, rates or different terms.
|
| Balloon payment |
This is the total final payment for all loans that
are amortized over a period which is longer than the
loan term. The balloon payment is total interest and
principal balance due at the end of the loan term. (If
the loan term is the same as the amortization this amount
is always zero.) |
