Glossary Detail - Total Credit Services

A

Accrued interest:

This interest builds on itself until a debt is completely paid off. It is determined by the unpaid balance of the original loan.

Amortization:

The process of gradually repaying a debt with regularly scheduled payments over a period of time.

Appraisal:

An appraisal on your home is an unbiased estimate of how much a home is worth. When buying a home, the lender requires an appraisal by a third party (the appraiser) to make sure the loan amount requested is accurate.

Arrears:

A legal term for overdue debts

Auction:

A public sale of property to the highest bidder.

Auctioneer:

a person who sells by auction; a person whose business it is to dispose of goods or lands by public sale to the highest or best bidder

B

Back in the Black:

refers to a company’s most recent financial status, generally its last accounting period. When a company is in the black, it is said to be profitable, financially solvent, and not overburdened by debt.

Bad debt:

Money that is owed to a business that’s considered irrecoverable.

Bailiffs:

A person employed by the court to remove non-essential belongings from a debtor’s property and auction them, with the money going towards settling an overdue debt.

C

Cash Advance:

A credit card cash advance is a withdrawal of cash from your credit card account. Essentially, you’re borrowing against your credit card to put cash in your pocket. Unlike a debit card withdrawal, where you’re accessing your own funds, with a cash advance, your credit card company is essentially lending you money and charging your account. The charge will likely cost you; cash advances generally have a transaction fee and a higher annual percentage rate (APR).

Collateral:

Property or assets a borrower pledges to secure repayment of a loan. Collateral may be seized if the borrower fails to repay the loan.

Collections:

When a business sells your debt for a reduced amount to an agency in order to recover the amounts owed. Credit card debts, medical bills, cell phone bills, utility charges, library fees and video store fees are often sold to collections. Collection agencies attempt to recover past-due debts by contacting the borrower via phone and mail. Collection records can remain on your credit report for 7 years from the last 180 day late payment on the original debt.

Commission:

This is compensation paid to a licensed real estate broker or by the broker to the salesman for services rendered. Usually a percentage of the selling price of the property.

Consolidation:

Combining monthly payments into one payment, often through a consolidation loan.

Credit Rating:

Is a score that has a basis on how a person pays his or her bills on time as well as the person’s employment status. It provides finance companies an idea of how credit worthy a person is and how well that person would be able to meet the credit obligation. A majority of the rating is based on how well a person has paid past obligations on time each month.

Credit Risk:

The risk that a Buyer may not be able to repay all or part of the amount of credit owed due to a cause of loss. Credit risk can be assessed in value (amount at risk) or in quality (credit scoring of the buyer).Borrowers who are more likely to pay as agreed pose less risk to creditors and lenders.

Current Balance:

The current balance reflects all of the purchases, interest charges, fees and unpaid balances on your credit card at the time that you check it. That’s why it’s called your current balance.

D

Debt restructuring:

A process that allows businesses to reduce and negotiate its debts to make the terms of repayment more manageable, thus boosting the liquidity of the company

Debt-To-Income (DTI) Ratio:

Your DTI is equal to your total fixed, recurring monthly debts divided by your total monthly gross household income. Mortgage lenders look at your DTI when they consider you for a loan to make sure that you have enough money coming in to make your payments. You may have trouble finding a loan if your DTI is too high.

Debt:

The amount of money owed.

Default:

The failure to promptly pay interest or principal when due.

Delinquency:

A term used for late payment or lack of payment on a loan, debt or credit card account. Accounts are usually referred to as 30, 60, 90 or 120 days delinquent because most lenders have monthly payment cycles. Delinquencies remain on your credit report for 7 years and are damaging to your credit score.

Delinquent:

The failure to accomplish what is required by law or duty, such as failure to make a required payment or to perform a certain action.

Disclosure:

The making known of a fact that had previously been hidden; a revelation. For example, you must disclose major physical defects in a house you are selling, such as a leaky roof or potential flooding problem.

E

Equity:

Various meanings, but in terms of finances, it’s ownership in an asset after debts related to that asset are paid off.

F

Fair Market Value:

A property’s fair market value is its accurate valuation in a free and open market under the condition that buyers and sellers are knowledgeable about the asset, acting in their best interests, and free of undue pressure to complete the transaction.

Fixed Rate Mortgage:

is a mortgage where the interest rate and the term of the loan is negotiated and set for the life of the loan. The terms of fixed rate mortgages can range from 10 years to up to 40 years.

Forbearance:

A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue.

Foreclosure:

When a borrower is in default on a loan or mortgage, the creditor can enact a legal process to claim ownership of the collateral property. Foreclosure usually involves a forced sale of the property where the proceeds go toward paying off the debt.

G

GIS Mapping:

Geographic Information System (GIS) is a software that blends the power of a map with the power of a database to allow people to create, manage and analyse information, particularly information about location.

Grace Period:

A period of time, often about 25 days, during which you can pay your credit card bill without incurring a finance charge. With most credit card accounts, the grace period applies only if you pay your balance in full each month. It does not apply if you carry a balance forward or in the case of cash advances. If your account has no grace period, interest will be charged on a purchase as soon as it is made.

H

Home Equity:

The part of a home’s value that the mortgage borrower owns outright. This is the difference between the fair market value of the home and the principal balances of all mortgage loans.

Home Inspection:

As a borrower, you may need to get a home inspection done, where a professional evaluates the condition of the house based on a visual assessment. The report will give you details on any problems with condition of the home.

L

Late Fee:

The fee charged customers for paying late or less than the required minimum payment due by the due date.

Late Payment Charge:

A fee charged by your creditor or lender when your payment is made after the date due.

Late Payment:

A delinquent payment or failure to deliver a loan or debt payment on or before the time agreed. Late payments harm your credit score, and are usually penalized with late payment charges.

Liability:

Obligation for repaying a loan in addition to charges and interest.

Lien:

A legal claim against a person’s property, such as a car or a house, as security for a debt. A lien (pronounced “lean”) may be placed by a contractor who did work on your house or a mechanic who repaired your car and didn’t get paid. The property cannot be sold without paying the lien

Liquidation:

Converting assets into cash, typically to settle debts with creditors.

Loss:

Situation in which a risk becomes real, giving the policyholder the right to claim compensation to the credit insurer

M

Maturity Date:

The date on which a borrower must repay a debt in total. The maturity date also indicates the period of time during which the lender or bondholder will receive interest payments.

Minimum Payment:

The minimum monthly payment is the lowest amount a customer can pay on their revolving credit account per month to remain in good standing with the credit card company. Making the monthly minimum payment on time is the least a consumer needs to do to avoid late fees and to have a good repayment history on their credit report. The amount of the minimum monthly payment is calculated as a small percentage of the consumer’s total credit balance.

Mortgage Refinance:

The process of paying off and replacing an old loan with a new mortgage. Borrowers usually choose to refinance a mortgage to get a lower interest rate, lower their monthly payments, avoid a balloon payment or to take cash out of their equity.

Mortgage:

is the loan and supporting documentation for the purchase of a home. Mortgage lenders generally follow strict underwriting guidelines to limit the possibility of borrowers defaulting on their payments.

P

Past Due:

A loan payment that has not been made as of its due date.

Personal loan:

A type of unsecured loan, meaning not tied to any property, for personal use and typically based on creditworthiness and other factors.

Principal:

is the term used to describe the amount of money that is borrowed for the mortgage. The principal amount that is owed will go down when borrowers make regular monthly or bi-weekly payments excluding interest.

Private Treaty:

is when a seller or agent lists a property for sale at a set asking price or a suggested price range. Buyers then put in offers and the seller or agent negotiates to secure the best possible sales price.

Promissory Note:

A financial instrument that contains a written promise by one party to another party a definite sum either on demand or at a specified future date.

Property Inspection:

is a noninvasive, visual inspection of a building, carried out by a fully qualified professional trained and experienced in evaluating buildings and their components. The inspection is designed to provide all the information needed to make an informed decision about potential purchase.

Property Surveyor:

Takes precise measurements to identify the boundaries of a parcel of land and prepares reports, maps, and plots that are used for construction, deeds, or other legal documents.

Property Tax:

Property taxes are paid to the governing body of the area your house is located in. The amount you pay depends on the area and the type of property.

Public Auction:

A method of sale where goods or services are offered by the trader to consumers, who attend or are given the possibility to attend the auction in person, through a transparent, competitive bidding procedure run by an auctioneer and where the successful bidder is bound to purchase the goods or services;

Purchase agreement:

This demonstrates a buyer’s intent to purchase a piece of property and a seller’s intent to sell that property. The document outlines the terms and conditions of a sale and holds each party legally accountable to meeting their agreement.

R

Receivables:

Anything that is owed to a business. This might be cash, or it might be other goods and/or services.

Refinance:

Paying off your existing loan with the proceeds from a new loan, generally using the same property as collateral, in order to take advantage of lower monthly payments, lower interest rates or save on financing costs

Repayment Period:

The period of a loan when a borrower is required to make payments. Usually applies to home equity lines of credit. During the repayment period, the borrower cannot take out any more money and must pay down the loan.

Repossession:

Act of a creditor seizing property to make up for a borrower’s failure to pay on a loan.

Restructured Loan:

When the terms of an original loan have been negotiated and changed, the revised loan is considered a restructured loan. If a borrower is experiencing financial difficulties, he or she may work with the lender to restructure the loan. In this case, the new terms may extend the repayment period and lower the monthly payment amount. Typically, a restructured loan allows borrowers to avoid default.

Revolving Debt:

A credit arrangement that allows a customer to borrow repeatedly against a pre-approved line of credit when purchasing goods and services. The debt does not have a fixed payment amount.

Risk:

the probability of non-payment usually due to external factors

S

Secured Loan:

A loan that is backed by collateral, such as an auto loan or a loan that finances the purchase of some appliances or furniture.

Security:

Anything that is put up to secure a loan is known as security. It may also be known as collateral in many loan documents. This security can take multiple forms. Some people may put up their home as security for a home equity loan. This allows the bank to offer a much lower interest rate than it would for an unsecured loan. However, anything that is of value may be considered as security for a home loan.

Statement Balance:

The statement balance shows everything you owed on the last day of your credit card’s monthly billing cycle. You can find the statement balance on the monthly statement you receive from your credit card issuer. This dollar amount is the total of any purchases, interest charges, fees and unpaid balances that appeared on your account during the billing cycle, which can be anywhere from 28 to 31 days long.

Survey:

A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.

T

Tracing:

This refers to the use of a variety of techniques to track down customers who have “disappeared” without paying their debts, whether this was by mistake or on purpose.

U

Unsecured Loan:

A loan that is not backed by collateral; it is guaranteed only by the borrower’s promise to repay.

V

Valuation:

is an estimate of how much a business, property, antique or any asset is worth.

Z

Zoning:

Is type of regulation put on land in order to dictate what can be done with the land. There are many types of land zones such as agricultural, residential, commercial, open space, and industrial. Knowing what types of zones lie around your house is very important when selling a house.