Understanding Loans

Front

What is equity?

Back

The difference between the value of a property and the mortgage.

Front

What is a mortgage loan?

Back

A loan for purchasing a house.

Front

Why do lenders charge interest?

Back

To make money.

Front

What is an open-end loan?

Back

A loan that allows for additional purchases.

Front

What is the APR?

Back

The total cost of borrowing.

Front

What is a secured loan?

Back

A loan backed by collateral to reduce the risk for the lender.

Front

What is an unsecured loan?

Back

A loan that does not require collateral.

Front

What is a fixed-rate mortgage?

Back

A mortgage with a constant interest rate throughout the term.

Front

What is a variable-rate mortgage?

Back

A mortgage with an interest rate that can change over time.

Front

What is a down payment?

Back

An initial payment made when purchasing a property, usually a percentage of the total price.