Loan Comparison - Definitions
| Term | Definition |
| Loan amount | The total amount for this loan. |
| Interest rate | Periodic charge, expressed as a percentage, for the use of borrowed money. Interest rates may vary and are subject to approval by the lender. Please enter the estimated current market rate. |
| Loan term | The number of years over which you will repay this loan. The most common terms for real estate loans are 15 and 30 years. Some loans may have a balloon payment, the loan term will be shorter than the number of years to amortize the loan. For example, a loan with a 5 year term amortized over 30 years will have the same monthly payment as a 30 year loan with the same interest rate. The difference is the 30 year loan will have equal payments for 30 years. The 5 year loan will have equal payments for 5 years and then a very large, or balloon, payment for the remaining balance. |
| Amortization | The number of years used in calculating the monthly payment. Loans that are amortized over a longer period than their loan term have a balloon payment. See "Loan term" for more information. |
| Origination fee | The amount charged as a loan origination fee which is included in the APR calculation. For many real estate loans a 1% origination fee is common. For example, a 1% fee on a $120,000 loan would cost $1,200. |
| Commitment fee | An upfront fee included in some real estate, construction, and commercial loans. This fee would be included in an APR calculation. |
| Other fees | Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest. |
| Other costs | Any other costs that should be included in the APR calculation, such as but not limited to : assumption fees, points, finder's fees, private mortgage insurance, premiums for credit life, or loss-of-income insurance. |
| Monthly loan payment | Monthly principal and interest payment (PI). |
| APR | The APR (annual percentage rate) is the yearly rate of interest and other fees, costs paid to acquire the loan. The APR calculations incorporate fees and interest into a single rate. Lenders are required by law to disclose the APR, and the rate is used to compare various loans available. |
| Balloon payment | This is the total final payment for all loans that are amortized over a period which is longer than the loan term. The balloon payment is total interest and principal balance due at the end of the loan term. (If the loan term is the same as the amortization this amount is always zero.) |