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Balloon Payment Mortgage
A balloon payment mortgage is a mortgage A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a ... which does not fully amortize Amortization (or amortisation; ) is paying off an amount owed over time by making planned, incremental payments of principal Principal may refer to: Title or rank * Principal (academia) The principal is the chief executive and the chief academi ... over the term of the note Note, notes, or NOTE may refer to: Music and entertainment * Musical note In music Music is the of arranging s in time through the of melody, harmony, rhythm, and timbre. It is one of the aspects of all human societies. General includ ..., thus leaving a balance due at maturity.Wiedemer, John P, ''Real Estate Finance, 8th Edition'', p 109-110 The final payment is called a ' ...
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Mortgage Loan
A mortgage loan or simply mortgage () is a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ... used either by purchasers of real property In England, English common law, real property, real estate, realty, or immovable property is land which is the property of some person and all structures (also called Land improvement, improvements or Fixture (property law), fixtures) integr ... to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien A lien ( or ) is a form of security interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and inv ... on the property being ...
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Bullet Loan
In banking and finance, a bullet loan is a loan where a payment of the entire principal Principal may refer to: Title or rank * Principal (academia) The principal is the chief executive and the chief academic officer of a university A university ( la, universitas, 'a whole') is an educational institution, institution of higher ... of the loan, and sometimes the principal and interest, is due at the end of the loan term. Likewise for bullet bond. A bullet loan can be a mortgage, bond, note or any other type of credit px, Domestic credit to private sector in 2005 Credit (from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, k .... In bullet loan one can choose to pay only the interest amount and bulk amount can be paid later at the time of the maturity of loan or as agreed by the financial institution. This arrangement is convenient to ind ...
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Refinancing Risk
Refinancing risk, in banking and finance, is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate balloon payments at the point of final maturity. Often, the intention or assumption is that the borrower will take out a new loan to pay the existing lenders. A borrower that cannot refinance their existing debt and does not have sufficient funds on hand to pay its lenders may have a accounting liquidity, liquidity problem. The borrower may be considered technically insolvency, insolvent. Even though their assets are greater than their liabilities, they cannot raise the liquid funds to pay their creditors. Insolvency may lead to bankruptcy even if the borrower has a positive net worth. To repay the debt at maturity, the borrower that cannot refinance may be forced into a fire sale of assets at a low price, including the borrower's own home and productive assets such as factories and plants. Most large corp ...
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Face Value
The face value, sometimes called nominal value, is the value of a coin A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from Ancient Greek, Greek μέταλλον ''métallon'', "mine, quarry, metal") is a material that, when freshly prepared, polished, or f ..., stamp Stamp or Stamps or Stamping may refer to: Official documents and related impressions * Postage stamp, used to indicate prepayment of fees for public mail * Ration stamp, indicating the right to rationed goods * Revenue stamp, used on documents to ... or paper money A banknote (often known as a bill (in the US and Canada), paper money, or simply a note) is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes we ... as printed on the coin, stamp or bill itself by the issuing authority. The face value of coins, stamps, or bill is usually its legal value. ...
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Coupon (bond)
A coupon payment on a bond Bond or bonds may refer to: Common meanings * Bond (finance) In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of ... is the annual interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money availa ... payment that the bondholder receives from the bond's issue date until it matures. Coupons are normally described in terms of the "coupon rate", which is calculated by adding the sum of coupons paid per year and dividing it by the bond's face value The face value, sometimes called nominal value, is the value of a coin A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from ...
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Bond (finance)
In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money available which could ..., a bond is an instrument Instrument may refer to: Science and technology * Flight instruments two-seat light airplane. The flight instruments are visible on the left of the instrument panel Flight instruments are the instruments in the cockpit of an aircraft that pro ... of indebtedness Debt is an obligation that requires one party, the debtor A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to ... of the bond issuer to the holders. The most common types of bonds include municipal bond A municipal bond, commonly known as a muni, is a bond Bond or bonds may refer to: Common ...
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Amortization Schedule
An amortization schedule is a table detailing each periodic payment on an amortizing loan In banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital mark ... (typically a mortgage A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a ...), as generated by an amortization calculator An amortization calculator is used to determine the periodic payment amount due on a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The rec .... Amortization Amortization (or amortisation; ) is paying off an amount owed o ...
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Interest
In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money available which could ... and economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant life and a bran ..., interest is payment from a borrower A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that requires one party, the debtor A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that re ... or deposit-taking financial institution to a lender A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting port ...
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Amortization (business)
In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes: amortization of loans and amortization of assets. In the latter case it refers to allocating the cost of an intangible asset An intangible asset is an asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive econom ... over a period of time. Amortization of loans In lending, amortization is the distribution of loan repayments into multiple cash flow installments, as determined by an amortization schedule An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage loan, mortgage), as generated by an amortization calculator. Amortization refers to the process of paying off a debt (often from a loan .... Unlike other repayment models, each repayment insta ...
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Loan
In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money available which could ..., a loan is the lending of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or verifiable record that is generally a ... by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest In and , interest is payment from a or deposit-taking financial institution to a or depositor of an amount above repayment of the (that is, the amount borrowed), at a particular rate. It is distinct from a which the borrower may pay the len ... ...
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Adjustable Rate Mortgage
A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the mortgage note, note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.Wiedemer, John P, ''Real Estate Finance, 8th Edition'', pp 99–105 The loan may be offered at the lender's standard variable rate/base rate. There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index, the rate can be changed at the lender's discretion. The term "variable-rate mortgage" is most common outside the United States, whilst in the United States, "adjustable-rate mortgage" is most common, and implies a mortgage regulated by the Federal government, with caps on charges. In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages. Among the most common indices are the rat ...
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Amortization (business)
In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes: amortization of loans and amortization of assets. In the latter case it refers to allocating the cost of an intangible asset An intangible asset is an asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive econom ... over a period of time. Amortization of loans In lending, amortization is the distribution of loan repayments into multiple cash flow installments, as determined by an amortization schedule An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage loan, mortgage), as generated by an amortization calculator. Amortization refers to the process of paying off a debt (often from a loan .... Unlike other repayment models, each repayment insta ...
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