A bullet loan is a type of loan in which the whole principal amount is paid back at the end of the loan term rather than through periodic payments. These loans typically have a short to medium-term duration, usually between 5 to 10 years, and can pose significant risk if the borrower cannot refinance or repay the loan principal as per the agreement.
The Constant Annual Percent, also known as the Mortgage Constant, is the ratio of the annual debt service (which includes both principal and interest payments) to the original loan amount.
A Direct Reduction Mortgage is a type of fixed-rate mortgage where both interest and principal are repaid with each payment, ensuring that the loan is fully amortized over its term.
A Flexible Payment Mortgage (FPM) allows borrowers to choose among several monthly payment options including lower interest-only and minimum payments, providing greater flexibility and control over mortgage expenses.
An open mortgage is a mortgage that has matured or is past its due date and hence remains open to foreclosure or repayment without any prepayment penaltiesat any time. It allows for flexibility for both the borrower and the lender.
To retire a debt means to pay off the principal on a loan, thereby fulfilling the obligation under the loan contract, which can be done through regular payments or a lump sum. It is a significant financial milestone indicating that the borrower has met the terms laid out by the lender.
A term loan is a loan with a set maturity date, typically borrowed with little to no amortization of the principal balance, requiring a significant payment at the end of the term.
