GENIUSEQUITY / THE GLOSSARY

Translate the fine print.

A plain-English reference for the language you’ll encounter along the way.

18 terms, explained.
01Amortization
The process of paying down a loan through scheduled payments that include principal and interest.
02Appraisal
A professional opinion of a property’s value, based on the appraiser’s analysis.
03APR
Annual percentage rate: a measure of borrowing cost that includes interest and certain fees. Compare like products and assumptions.
04Cash-out refinance
A new mortgage that replaces an existing mortgage and provides additional funds after payoffs and costs.
05Closing costs
Charges associated with completing a loan or property transaction. Ask for an itemized estimate.
06Collateral
Property pledged to secure a debt. A home-secured loan puts the home at risk if repayment obligations are not met.
07Combined loan-to-value (CLTV)
A comparison of total home-secured debt with the property value. Lenders may treat credit lines differently.
08Draw period
The period during which a HELOC agreement allows access to available funds.
09Equity
The difference between estimated property value and outstanding debt secured by the property.
10Fixed rate
An interest rate that stays the same for the period specified in the agreement.
11HELOC
Home equity line of credit: a revolving credit arrangement secured by a home.
12Home equity loan
A loan secured by home equity, generally delivered as a lump sum and repaid over a stated term.
13Lien
A legal claim against property that can secure payment of an obligation.
14Loan-to-value (LTV)
A loan balance divided by the property value, expressed as a percentage.
15Payoff amount
The amount needed to satisfy a loan on a specified date. It may differ from the principal shown on a statement.
16Principal
The outstanding loan amount, excluding interest and other charges.
17Repayment period
The period in which borrowed funds are repaid according to the agreement; for a HELOC, it follows the draw period.
18Variable rate
An interest rate that can change according to the agreement, often based on an index plus a margin.