Chapter 10
subprime mortgages
higher interest rate mortgage loans made to people with poor credit scores
liability coverage
insurance that covers you against any damage you do to other people or their property
APR annual percentage rate
interest rate charges on personal loans are reported
federal Perkins loans
loans for students with "exceptional financial need"
unsecured loan
loans that have no collateral pledged against the loan
secured loan
a loan that has some asset pledged against the loan so the lender is assured of winding up with some valuable asset if the borrower fails to pay off the loan
personal loans
a type of credit that is typically started at the time of purchase for a specific asset (car, boat,)
policy riders
additional insurance coverage to cover things such as jewelry or valuable heirlooms that are often not fully covered by a typical insurance policy
ARM
adjustable rate mortgage
a home equity loan
allows a homeowner to borrow against the equity in the home- that is the difference between the homes value and the amount owed to a lender
a line of credit
an agreement to allow borrowing as needed up to a certain amount of money
teaser rate
an extremely low interest rate for a short period of time that is used as a deal sweetener
a lease
essentially a long term rental agreement
cosigner
someone who agrees to sign the loan document and to repay the loan if the original borrower stops making payments
collateral
the asset that have been pledged against loan repayment
mortgage
the common term for the type of loan people take to obtain a home
maturity date
the date at which the loan will be completely repaid
fixed rate martgage
the interest rate remains the same for the life of the loan
federal stafford loans
the most common type of federal education loans
Down payment
the portion of the purchase price that the buyer is required to pay
defaults
when the borrower stops making the loan payments
