Loan Glossary

A form of business lending where outstanding customer invoices serve as collateral. The lender advances 70%–90% of the invoice value immediately, then collects from the customers.

A mortgage whose interest rate changes periodically based on a benchmark index. Initial rate is usually lower than a fixed-rate loan, but payments can rise after the introductory period ends.

The process of paying off a loan through regular payments over time. Each payment covers both interest and principal, with the interest portion decreasing and the principal portion increasing as the balance declines.

The true yearly cost of borrowing, expressed as a percentage. APR includes the interest rate plus fees (origination, points, mortgage insurance), making it more accurate than the stated interest rate for comparing loan offers.

An independent professional estimate of a property's market value. Lenders require appraisals to ensure the collateral is worth at least the loan amount before approving a mortgage.

Taking over the seller's existing mortgage. VA and FHA loans are often assumable, potentially allowing a buyer to inherit a lower interest rate from a previous owner.