U.S.A. Industry Lending Glossary

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Commercial Terms

LIBOR-London Interbank Offering (Borrowing) Rate

Construction Loan - An extension of credit for the purpose of erecting or rehabilitating buildings or other structures, including any infrastructure necessary for development.

Net Operating Income - Annual income after all expenses have been deducted, except for depreciation, debt service and taxes.

Commercial Loan - A loan for business purposes, including commercial mortgage loans.

1031 Exchange - A section of the IRS Code permitting a tax deferred or tax free exchange of properties of like-kind which are either held for investment or for productive use in a trade or business. Only commercial property exchanges are permitted although "like-kind" property has a broad meaning.

DCR - Debt coverage ratio. The ratio of annual debt service to annual net operating income. This ratio indicates the percentage by which annual debt service is covered by net operating income.

Apartment financing - A long term commercial loan to purchase or refinance an apartment building.

Office Building financing- A long term commercial loan to purchase or refinance an office building.

Golf Course financing - A long term commercial loan to purchase or refinance a golf course.

Multi-Family Housing financing - A long term commercial loan to purchase or refinance a multi family housing complex.

Farm financing - A commercial loan to finance the operation, or real estate, of a working farm.

Gas Station/C-Store financing - A long term commercial loan to purchase or refinance a gas station/c store.

A & D Loan - A short term "bridge" loan, usually interest only, to finance the improvement cost(s) of a residential or commercial development. It does not typically involve funds for vertical construction.

Warehouse/Industrial Building financing - A long term commercial loan to purchase or refinance a warehouse or industrial property.

Medical Office Building financing - A long term commercial loan to purchase or refinance a medical office building

Land Loan - A commercial loan to finance the cost of raw land acquisition. It's usually short term in nature.

Hotel/Motel financing - A long term commercial loan to purchase or refinance a hotel/motel property.

Retail/Strip Center financing - A long term commercial loan to purchase or refinance a retail or strip center commercial property.

Residential Terms

Second Mortgage - A lien is placed on your home in the second position. These loans are generally at a fixed rate for a 10-20 year term.

B/C Credit- a person who has dings on their credit report whether it be from a bankruptcy, collections, late payments, foreclosures, a judgment or any other issue.

Calculate Payment - How to calculate a mortgage payment using loan amount, rate and term.

Commercial - any property that is a non-residential property

Commercial Loan - a loan that is placed on a commercial building or raw land to be used for future commercial development.

Construction - to construct a home or building.

COFI ARM - an adjustable rate mortgage based on the Cost of Funds Index

FNMA - Federal National Mortgage Association - purchases loans on secondary market.

Freddie Mac - government entity that purchases loans on the secondary market.

GFE - Good Faith Estimate - Estimate of costs associated with closing a loan transaction.

HELOC - home equity line of credit a loan to pull equity out of your home.

Home Equity - equity in your home

Land Contract - an agreement between a buyer and a seller to purchase a property for a short period of time.

Interest Only- a loan where each month only interest is paid. Each additional amount above the interest is place on principal and the loan is then recalculated the new month on the new principal amount.

Payment- the amount of money owed each month on a loan.

Investment Properties - properties that are not going to be owner occupied and receive rental income each month.

LIBOR- London International Bank Rate - Index used as basis for several different types of loans.

Loan Application - information taken to make a loan decision.

MAT ARMS - an index used in calculating adjustable rate mortgage.

Mixed Use - a property that can be used either for a residential dwelling or a business entity.

One-Time Close OTC - a construction loan that will close one -time prior to construction, the builder will receive draws during the construction period and a note will be modified to a permanent loan when construction is complete.

Purchase - buying a home or property.

Reverse Mortgage- a mortgage where the equity in the property is taken out in hopes of future appreciation in the market. Payments are then set up based on the equity on a monthly basis.

Sub-prime - any loan that can not fit into conforming product guidelines.