Business and Consumer Loan
Amount to be financed formula
cost - down payment
Adjustable Rate Mortgage
has a interest rate that increase or decreases during the life of the loan
Total payment
mortgage x 12 (months) x term of the loan
Lendee
person who gets a loan
Fixed Rate Mortgage
the interest rate stays the same for the entire term of the loan
collateral
An asset used to secure a loan
Loan
Financial obligation of paying someone for the use of their money
Principal 1
MA - Interest 1
Amortization table
A chart that shows the month by month breakdown of each mortgage payment into interest and principal and the balance
Mortgage
A loan to purchase a home or other real estate; real property is used as a collateral
Amortization
A method for computing equal periodic payments for an installment loan.
Balance 2
Balance 1 - Principal 2
Interest 2
Balance 1 x r x (1/12)
Balance 1
Beginning Balance - Principal 1
Down payment formula
Down payment rate x cost
Business loan
Money lent specifically for business
Consumer loan
Money lent to an individual for personal or family purposes
First step in finding the amortization table
Monthly amortization
Lender
Ones who lend the money
Interest 1
Pr(1/12)
Term of the loan
Time (in years) to pay the entire loan
Total interest
Total payment - mortgage
Down payment
a partial payment made at the time of purchase
Guarantor
a person who agrees to pay a debt if the primary debtor does not