Interest and Discount Points and Loan Repayment Flashcards Preview

SCC REA 201 > Interest and Discount Points and Loan Repayment > Flashcards

Flashcards in Interest and Discount Points and Loan Repayment Deck (13)
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1
Q

Amortized Loan

A

The liquidation of a financial obligation on an installment basis, which includes both principal and interest

2
Q

Balloon Payment

A

A note’s final installment payment, which is greater than the preceding payments and pays the note in full

3
Q

Budget Loans

A

When the borrower is forced to put away money in trust for the payment of the property taxes and insurance

4
Q

Direct Reduction Loan

A

Constant principal reduction plus the interest due on the unpaid balance

5
Q

Discount

A

A charge made by lenders to increase the effective rate of interest (yield) from the stated interest rate on the note

6
Q

I = P x R x T

A

Formula for calculating interest.

Interest equals principal times rate times term

7
Q

Installment Loan

A

A loan that allows payment over an extended period of time

8
Q

Interest Rate Buy-Downs

A

A reduction of the interest rate stated on the note by payment of points at the time of loan funding

9
Q

Legal Rate

A

The rate of interest allowed by law when an obligation or court-ordered judgement does not state a rate of interest on the obligation due; the legal rate of interest in Arizona is 10 percent.

10
Q

Partially Amortized Loan

A

A loan that begins with amortized payments but ends with a balloon payment

11
Q

PITI

A

A type of payment (principal, interest, taxes, and insurance)

12
Q

Point

A

1 percent of the loan paid the lender or the lender’s agent at the time the loan is made

13
Q

Usury

A

Charging at a higher interest rate than allowed by law

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