Rate Cap – This is the limit on the amount of interest that can be charged on a loan.
Recourse - In the event of default by the borrower, a loan with recourse enables the lender to have the right to demand payment from the endorser or guarantor who is liable for the debt.
Refinancing - An existing loan is paid off with the proceeds of a new loan in order to obtain a better interest rate or lower monthly repayments.
Repayment Period – This is the period in which the principal and interest payments of the loan have to be fully repaid.
Restructure - A financial agreement may be revised, such as reducing the interest rate or extending the repayment period to accommodate the borrower’s financial situation.
Rescission - Rescission is the cancellation of a contract by a borrower.
RESPA (Real Estate Settlement Procedures Act) – This is a federal law that regulates real estate lending practices and disclosures. It allows borrowers to review information on known or estimated closing costs within 3 days of making a loan application.
Revolving Line of Credit – This is a line of credit that allows the amount to be borrowed again once it has been repaid.
Roll Over – Nearing maturity the borrower has the option to renew the loan for another successive period of time.
Secondary Market – This is a market where existing mortgages are bought and sold by lenders and investors.
Second Mortgage – Known as an additional mortgage on a property, that has a second lien position to the first mortgage.
Secured Loans – A secured loan is where the borrower pledges an asset, such as personal property or real estate, to act as collateral in case of default.
Senior Debt – This is a debt that has a higher priority to be repaid than other debts.
Settlement - Also known as closing, this is the finalizing or completion of the sale of a property.
Settlement Costs – These are fees paid at closing of a loan incurred by the buyer and seller of a property. They may include lawyer’s fees, survey charges, taxes, title search and insurance.
Term - This is the amount of time it takes to pay off a loan.
Title - This is a legal document showing evidence of ownership of a property.
Title Insurance – Usually required by the lender, title insurance protects the lender, or owner, against the loss of property in the event of an ownership dispute or due to errors being made in the title search.
Title Search – A title search is the examination of public records, to determine the legal owner of the real estate and to note any encumbrances or restrictions that may affect the title.
Truth-in-Lending Act – The Truth-in-Lending Act, also known as Regulation Z, is a federal law requiring lenders to fully disclose credit terms and conditions such as the Annual Percentage Rate (APR), total loan amount and outstanding loan payments before the borrower signs the loan agreement.
Underwriting - This is a process a lender uses to assess whether a potential borrower is eligible for a loan.
Unsecured Lines of Credit – This is a revolving loan for which a borrower does not have to offer any collateral.
Variable Rate – This is a rate of interest that fluctuates, in relation to an index, over the term of the loan.