Business and Consumer Loan

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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


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