Can you help me better understand some financial terms?
Yes! Here are some common terms often associated with the financing process that are helpful to know:
Amount Financed: Principal Loan Amount added to any additional amounts financed less any prepaid finance charge and down payment.
Application- Customer: Document that customer completes to apply for a loan through GE Money.
Appraisal: Evaluation of a property to determine value.
Annual Percentage Rate (APR): The actual cost of borrowing money, expressed in the form of annual rate, to make it easy for one to compare cost of borrowing money.
Borrower: One who obtains or received something on loan with the promise or understanding of returning it, or its equivalent.
Closing: In real estate transactions, the final set of procedures in which documents are executed and/or recorded and the transaction is finalized.
Closing Costs: Expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, closing fees, points, etc.
Closing Documents: Documents signed between a consumer and a lender obligating the consumer to the loan terms.
Closing Service: A service that completes final loan paperwork with a customer, by providing witness to the customer’s signature.
Collateral: Property used to secure a loan.
Completion Certificate: A document that the customer signs after all the work, as designated on the dealer’s work order, has been completed to his/her satisfaction. This document is then faxed or mailed to GE Money to activate funding. Completion certificates area also sent to customers with checks on staged funded loans. We ask that the customer sign and return to us when all of the work is completed.
Completion Funding: Process of loan payment made to dealer upon completion of the project after GE Money received a signed completion certificate.
Credit History: A chronological record of customer’s payment background.
Credit Report: A document from a credit bureau setting forth a credit rating and pertinent financial data concerning a person or a company and used by banks, merchants, suppliers, and the like of evaluating a credit risk. Credit reports are regulated by the federal Fair-Credit Reporting Act.
Creditor: One who grants or lends money.
Deb to Income (DTI): A calculation determined by dividing a consumer’s total monthly expenses by his/her total monthly gross income, used to assess if the consumer can take on additional expenses and the amount the consumer can afford.
Default: A breach or nonperformance of the terms of a note or covenants of a mortgage.
Equity: The money value of a property or of an interest in a property in excess of claims or liens against it.
FICO: A standard measure of monies (one-time or multiple loan funding).
Finance Charge: The cost of consumer credit as a dollar amount.
Installment Loan: A loan made to be prepaid in specified, usually equal, amount over a certain number of months.
Lender: One who grants credit or lends money.
Liability: Claims on the assets of a company or individual.
Loan: A transaction wherein an owner of property allows another party, the borrower, to use the property in exchange for payment(s).
Loan Contract: An agreement by which rights or acts are exchanged for lawful considerations.
Loan Stipulations: Documents required by a lender to prove commitment before loan funding (e.g. Proof of Insurance, Flood Certificate). Also called Loan Conditions.
Loan Terms: Provisions specifying the nature of an agreement or contract.
Loan to Value (LTV): This ration is the result of total outstanding liens on property divided by the property value.
No-Equity Program: A loan program that does not require the customer to have equity in his/her property.
Non-lien: A loan that does not take real estate collateral for security.
Property Report: Also known as a title search or title report, a property report is a review of all recorded comments affecting a specific piece of property to determine the present condition of title.
Property Value: The value of a customer’s property as determined by an appraisal report, the county tax assessor, or other value determination.
RESPA, Real Estate Settlement Procedures Act: A Federal Statue governing disclosure of settlement cost in real estate transactions.
Tax Deductible Loan: A loan, which is exempt from inclusion in one’s taxable income.
Verification of Income: A form of information required by the lender to provide a customer’s income, such as a pay stub or tax returns; the lender may also require verbal verification with the consumer’s employer.
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