The American Council of Life Insurers (ACLI) is a trade association representing life insurance companies in the United States. It provides historical data on interest rates, loan terms for commercial property mortgages, and advocates for legislative and regulatory actions favorable to the life insurance industry.
A balloon payment is the final and often significantly large payment on a loan, typically required after a series of smaller installment payments. It clears the remaining debt owed on the loan.
A borrower is a person or entity that has received a loan and is obligated to repay the amount borrowed, often with interest and other fees, according to the loan terms. The term is commonly used interchangeably with 'debtor.'
A commitment letter is an official notification from a lender to a borrower indicating that the borrower’s loan application has been approved, detailing the terms of the prospective loan.
A consolidation loan is a new loan that pays off more than one existing loan, generally providing easier repayment terms. It is often used to simplify multiple debts into a single monthly payment with a potentially lower interest rate.
A discount in the context of real estate represents the difference between the face amount of an obligation and the amount advanced or received for the loan. It often indicates the sale of a loan or mortgage at less than its face value.
A fixed-rate mortgage, or FRM, is a loan secured by real property featuring an interest rate that remains constant for the term of the loan. It contrasts with an adjustable-rate mortgage (ARM) in that the interest rate does not fluctuate based on market conditions or an index.
An Indexed Loan is a long-term loan where the term, payment, interest rate, or principal amount may be adjusted periodically in accordance with a specific index.
A Letter of Commitment serves as official notification to a borrower from a lender, indicating the latter's intent to grant a loan. This letter typically specifies the terms of the loan, including interest rate, loan term, and sets a date for closing.
Loan terms refer to the major requirements and conditions of a loan agreement, including aspects such as interest rates, repayment schedule, fees, and other obligations set by the lender and agreed upon by the borrower.
Maturity refers to the due date of a loan, bond, lease, or insurance policy when the principal amount or full sum is to be repaid or the agreement expires. It establishes the timeline over which periodic payments or interest accrues and is eventually repaid.
A process whereby a specific mortgage lender certifies that a prospective borrower is financially qualified and creditworthy for a specific type of loan with specified terms for an amount up to a specified maximum. Actual advancement of the loan will depend on the suitability and value of the collateral property, which is unspecified at the time of pre-approval. Contrast PREQUALIFY.
Prepayment penalty is a fee that some lenders impose on borrowers who pay off a loan early, helping the lender recover some of the interest they would have earned if the loan went the full term.
Refinancing refers to the process of replacing an existing mortgage with a new one, typically to secure better loan terms such as a lower interest rate or a different type of loan structure. Often abbreviated as 'refi,' this process involves paying off an old loan with a new loan, typically to take advantage of lower interest rates, different loan terms, or to switch from a variable-rate mortgage to a fixed-rate mortgage.
A Two-Step Mortgage, also known as a Hybrid Mortgage, combines an initial fixed interest rate period with an adjustable rate for the remainder of the loan term.
A variable interest rate is an interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically.
