What is Equity Sharing?

What is Equity Sharing?

An equity share is an agreement between you (the seller) and the buyer to co-own the property. In an equity share, instead of selling 100% of the property, you agree to retain partial ownership. By giving up 20% of the sale price now, you could keep as much as 50% or more of the future equity.

For example, suppose your house is worth $600,000 but isn’t selling. A buyer comes along who is pre-approved for a $480,000 loan but has no down payment. To create an equity share with this buyer you sell for $600,000 but only take $480,000 in cash now. You “leave in” the remaining $120,000 as the down payment until the house is sold or refinanced by the buyer a few years later. Then, any equity is divided. Each owner is first repaid their contributions to principal (your $120,000, and the buyer’s principal payments) and each receives their percentage of any remaining equity.

Here’s the best part. As the “investor,” you are entitled to a larger share of the remaining equity than you might expect. For your 20% investment you might receive as much as 50% or more of the equity in the property.

A Solid Investment

So now you are an investor, but what kind of investment do you have? It is important to understand the specifics of an equity share investment before entering into an agreement.

Equity sharing is an attractive way to invest in real estate for many reasons. The buyer will live in and maintain the property, as well as pay all of the ongoing property expenses like taxes, insurance and mortgage payments. The agreement is also for a fixed term, usually 3-7 years, so you can simply wait while the property appreciates in value until the end date.

But the best thing about your investment is the leverage you get. You contributed 20% of the home’s value and received around 50% of the equity. At the end of the term the mortgage is paid off and each partner receives their (principal) investment back before splitting the remaining equity. Typical returns on equity sharing investments are between 10-20% per year. With annual property appreciation of 5% you could expect to make a 16% per year return on your investment. That can be an attractive result compared to the zero percent return earned by people who sell the usual way.

Is it Safe?

You may never have heard of equity sharing, but it has been around for a long time. It’s so common now, that the IRS has even developed special rules that allow equity sharing partners to each get the maximum possible tax benefits from their arrangement.

Your investment is secured by the property, and you already know everything there is to know about the property itself. There is always risk that the property won’t sufficiently increase in value before the end of the term, but there are provisions in the agreement to ensure you recognize a minimum return which you can specify.

About Home Equity Share

If you’re interested in equity sharing, there are several things you’ll need to ensure success. In addition to finding a suitable partner you need a lender familiar with equity sharing. You will also want to create and sign an “equity sharing agreement” (a contract) with your partner that protects everyone legally.

Home Equity Share can provide you with all of the tools and resources you’ll need to complete successful equity share. Through our network of independent agents, we provide services to home buyers and sellers free of charge in most cases. We can offer our highly detailed and time-tested Model Equity Sharing Agreement, and through our network of providers we can help you find whatever resources you may require to complete your transaction.

Link to a forum : How to get extra money to pay off debts

"I had been through the debt road before and although I am still undergoing debts but thankfully it had been minimized tremendously.

Sometimes, you can't just depend on a source of income unless you are earning a CEO's pay or 10k and above per month

These are a list of things which I did that had earned me extra cash to put that extra to the debts

(1) E-Bay- IF you have items that need selling belief me E-bay is the place. Remember One man's junk is another's treasure. (On a side note, i even seen people selling their souls??) Moving on..

(2) DO you have insurance? You may wish to take from your insurance first to repay heavy debts especially Credit Cards.

(3) Do you have a skill? My Example, I went to learn Home Beer-Brewing course and sold my beers between friends and neighbors. You will be amazed on the power that the word of mouth has. Of course your beers need to be good. (I don't mean to brag but..

IF you can paint, go house to house and offer domestic services.. I managed to make a bundle from this

(4) Research through the internet and you will find certain get paid to (like this one) google paid to survey

Well these are just a few that I did and thought of sharing.

Good Luck

"

see this forum at : http://www.debtconsolidationcare.com/settlement/extra-cash.html

Debt Consolidation Scam

Choose your debt consolidation companies carefully. There was a recent scam shut down by the government. The company misrepresented itself to clients. Fortunately the government was able to get them to give at least some of the money back.

If you are looking for a debt consolidation company, make sure you find someone who is reputable. Banks are a good place to start. Depending on your situation they may not be able to help you directly, but they should have a good idea of who isn’t trustworthy.

Also consider checking with some of the large churches in your area. Many of the larger churches teach financial management classes and may be able to direct you to a reputable consolidation company in your area. A quick call the the Better Business office should also help steer you clear of any companies who have ripped people off in the past or that others have found difficult to work with.

Remember that there is a lot of money involved in debt consolidation. Even if a company tells you that they are non-profit be wary of everyone’s motives–especially if you don’t personally know others who recommend them.

Watch out for Debt Consolidation Fraud

The FBI website has some information on a scheme to defraud people looking for consolidation loans.

On 10/17, the manager of Amansco Credit Services was found guilty of conspiracy to commit wire fraud… that is, of conspiring to commit a massive telemarketing fraud between two companies — Franklin Credit and Amansco Credit, which billed customers for over $2.7 million in 1997 and 1998. Before the FBI shut the operations down, over 5,000 customers were defrauded. The manager’s conviction follows earlier guilty pleas to the scheme by eight sales people from Franklin Credit.

What was the scheme? Promised debt consolidation. For a mere $295, you’d receive a low interest debt consolidation “loan” from Franklin Credit to pay off your creditors. Except there was no loan — you just got turned over to Amansco Credit… and it only provided a bill-paying service.

This wasn’t a small operation. There is big money in debt consolidation, so it attracts people who are looking to make money fast. Fraudulent schemes can range anything from outright stealing people’s money like this company to charging higher fees for legitimate service.

The FBI site suggests that the following signs are good indication that you should just walk away:

Act now or the offer won’t be good. You’ve won a free gift/vacation/prize… but you have to pay for postage and handling/ taxes/other charges. Just send money, give us your credit card number, or… we’d be glad to pick up your check by courier. We’re a well known company — don’t delay by checking us out. You can’t afford to miss this high-profit, no-risk offer!

link

Online Debt Consolidation

A lot of people are looking for online debt consolidation programs. While this sounds convenient, it might not be the best option. If you use an online consolidation program, it is more difficult to understand their reputation. There is big money in debt consolidation and consolidation loans, so more than a few people are out to scam you. By going with a local consolidation company you can find someone who has a good reputation and who you aren’t just another number to.

Another problem with online consolidation loans is the fact that it lets you remain somewhat anonymous. From a psychological standpoint, this may make it difficult to curb the behavior that led you to the point where a consolidation loan is necessary. Remember, a consolidated loan is just a tool to help you get out of debt. Changing your spending habits is the only thing that will really help you pay off your debt.

If you do everything over the internet you don’t have the same mindset as you do when you go to a real person and tell them you need help. That combined with the chance of debt consolidation scams make local established debt consolidation and credit counseling companies much more attractive than their online counterparts.

Automobile Loans

One of the most common things to borrow money for is an automobile. Low interest rates make it very easy to afford monthly payments on a new car, but what is the best strategy for someone looking to get out of debt quickly.

New cars depreciate very fast. This means that once you purchase the car the maximum amount you could sell it for will be significantly less than the amount you financed. New cars lose a great deal of their value once you drive them off the dealers lot. Because of this it is usually unwise to think of your car as an investment.

Generally it is much more cost effective to buy a used car. Someone else has taken the biggest loss from depreciation, so you will be able to recover much more of your original purchase price when you later sell the car.

If you are financing your vehicle be sure to think practically about the terms of the loan. If you get 5 year financing on a car that you think will last you 3 years, you may lose a good deal of money. However, many times you can find excellent rates on car loans. Sometimes dealers even have 0% interest just to let them move more inventory. In this type of situation, financing your car may give you more free money to pay off higher interest credit to help you get out of debt more rapidly.

Be careful about getting a debt consolidation loan that includes your vehicle. While this can be a good strategy, it can also cause problems. If you take out a 30 year consolidation loan to pay for your 2 year old automobile you will probably be paying on the vehicle long after it is gone. Worse yet, you’ll be paying interest on it years after you’ve sold it.

If you are using consolidation to get out of debt quickly, you may be able to use the new consolidation loan to let you pay more on the principle that you owe. Just make sure that you avoid getting into a situation where 15 years later, you are paying on 2 or 3 vehicles that you no longer own. The lower payments of a consolidation loan are nice, but not if they will put you in a constrained financial position in the future.

Debt consolidation is something that you need to approach from a long term perspective as part of a debt reduction plan. If you try to use debt consolidation as a short term fix for credit problems you will regret it later.

Depreciation

One of the reasons people get into financial problems is because they don’t understand how items depreciate. Most items are worth less over time. For example, if you bought a car in 2001, it is probably worth less than what you originally paid for it. This is depreciation. The value of your property depreciates over time. That computer you spent $1000 on in 1999 is probably worth about $10 today.

People get in trouble with debt when they borrow money for items that depreciate rapidly. For example if you buy a stereo today for $1000 using credit, once the stereo is no longer new it is worth less than what you owe. You couldn’t take the stereo out and sell it for the amount you owe on it. If an individual buys many things like this it is easy for their net worth to become negative very quickly.

On the other hand, certain types of items retain their value. For example, if you bought a house 5 years ago, it is probably worth more today that what you paid for it. If you have a traditional mortgage, you now owe less on the house that what you could sell it for.

In general if you have to take out a loan, you should only use borrowed money for items that don’t lose their value. It is better to borrow money for your house than for your automobile because the house will retain its value much longer than the automobile.

Credit Counseling

Debt consolidation is a last resort. The best plan of action is to avoid ever getting into a situation where you need debt consolidation services at all. This is where credit counseling can be very valuable. You sit down with a financial adviser who helps counsel you in how to change your spending habits and your lifestyle to help keep you out of debt.

Debt comes in many forms and some debt is worse than others. A credit counselor can help explain this to you and help you make wise choices about how you spend your money and prepare for the future. Not everyone grew up with good financial role models and the current education system does little to make people financially literate. If you need help in staying out of debt, get help before you need it.

Almost everyone can benefit from some good solid financial advice. If you think you have a problem with the way you are managing your money and thing that there is even the possibility that you may be taking on too much debt, get some credit counseling sooner than later. The risk of being wrong is too great. Chances are a credit counselor will be able to give you some advice regardless of your financial position so you really don’t have anything to lose.

Staying out of Debt

Most of the visitors to this site are probably looking for help after they have financial problems. This post is for the people reading this, before the are are running into money difficulties.

One of the most liberating things you can do in life is to stay out of debt. This seems hard to do, but it is mainly a cultural thing. In the US people are expected to go into debt. They buy new cars that they can’t afford. They go to expensive schools where the tuition is very high. They buy electronic equipment on credit to have a cool stereo or television. They try to get the biggest apartment possible and on and on.

Many of the reasons people go into debt is for status. They want to own a newer vehicle so they can look good. Buying a used car for $2000 isn’t good enough because it won’t look good to their friends. They want a big apartment so everyone can be impressed with their home, etc. There are some times that it makes sense to take out a loan. Buying a house and in some cases paying for college, but you have to make sure you are going into debt for good reasons not for personal status.

Getting into debt limits your options. If you are heavily in debt and suddenly your job changes to where you hate it, you may not be able to quit your job because of your financial obligations. Your ability to control your own destiny is decreased by every dollar you owe someone else.

When you are completely free from debt, you have opportunities that no one else has. I have spent my life being very careful to stay out of debt. All my cars have been purchased with cash (and I always buy used vehicles). I paid for college with scholarships and cash. The only debt I’ve ever had was a mortgage that I paid off in 2 years when I sold the house.

When I decided I wanted to quit my job and start my own business, it was very easy to do. We had enough in savings from selling our house to last 2 years without any income (just in case the business didn’t do well). The only way I was able to do that is because I had worked very hard to stay out of debt from a very young age. I usually drove a car that was older than everyone else. I worked most of the time I was in college. Every summer I worked 60 to 80 hours per week to pay for college. I may have looked less affluent to many of my friends, but now they are starting to see a difference. Their cars are now old (mine is a newer used vehicle that I recently purchased), they have a very nice very big house that they are struggling to pay off while I live in a smaller place but have money free to travel and pursue other interests. They are working for jobs that they can’t leave for fear of losing their house while I work for myself

If you can stay out of debt from a young age, you will find your life will be much easier. It might look like you are behind your peers at first but in your late 20s, you’ll start seeing a big difference between you and your friends. Debt is a mindset. If you do your best to avoid that mindset, you’ll give yourself opportunities that go way beyond what your peers are able to achieve.

Cars are not investments

When it comes to managing your debt, your car is not an investment. The value of a new car decreases significantly as soon as you drive it off the lot. Assets appreciate in value. For example, your house is probably an asset. In most situations it will be worth more 5 years in the future than it is now. Your car will be worth significantly less.

In generally you want to avoid borrowing money for things that are not assets. Since your car is going to decrease in value, you are often better off to buy a good used car that you can pay for with cash than finance it. In two years the car will be worth significantly less. In some situations it will be worth less than what you owe on it.

Borrowing money to spend on assets doesn’t have nearly the same risks. If you borrow $100,000 for a house and in two years the house is worth $15,000 more than it was when you bought it, then you are doing very well. Housing prices don’t always go up, but it is one of the lower risk investments you can make–as long as you don’t buy a house that is already overpriced.

It is much easier to consolidate any outstanding debts when most of your loans are for assets–things that are worth more than they were when you bought them. In fact if most of the money you owe is on items that are worth more than they cost, you probably aren’t going to really need to look into debt consolidation other than possibly refinancing to take advantage of lower interest rates.

Debt consolidation and debt settlement usually becomes necessary when people have taken out loans for items that are worth less now than they were when purchased. The $5,000 stereo someone bought last year, isn’t likely to be worth anywhere near $5,000 now. Lets say it is now worth $2,500. However it is likely that they still owe $4,000 on it. If someone does this over and over again, they end up in a situation that is ideal for the bank or whoever else is loaning them money. They have basically traded their money for an item that is now worth significantly less, but they amount they owe doesn’t go down as they value of their purchase goes down.

Delaying purchases until you can pay cash not only keeps you from needing to deal with debt settlement issues, but with most items it means your money will go further. The stereo you could have bought on a credit card 2 years ago for $1,000 is likely to only cost $500 today.

Debt Settlement Letter

If you are in financial trouble and feel that settlement of some of your debts is the only option, you can hire a lawyer to help you or you can attempt to work with your creditors yourself. If you decide to do it your self you’ll need to contact each company where you owe money and try to work out an alternative balance. It is best to do this in writing making sure you keep a copy of every letter you send for your own records.

Here is a sample letter that you could send to a credit card company asking for a reduction in your payment. Remember this is only a sample of what you might want to send. It should be customized for your exact situation and for the settlement you are trying to get.

Credit Corporation
1234 Any Lane #99
Anyplace, CA, 58492

RE: Account 91817167

Dear Sir/Madam:

I have had some financial set backs that have made it difficult to meet my obligations to make my monthly payments to you. I am now recovering financially and am trying to contact each company where I owe money and work out a payment arrangement that will allow me to avoid bankruptcy.

Last fall I was lost my job from Citco Incorporated. While looking for a job I did roofing work and suffered an accident that put me in the hospital for 6 weeks. I now have a job with another company.

I would like to purpose that you close my account waiving all interest and late charges and accept a new balance of $1200 which I will pay at a rate of $100 per month over the next year. If this is acceptable to you, please have your representatives contact me to work out the remaining details.

Sincerely,

Bob Bobington

Obviously the credit company is under no obligation to accept your offer, but if you are making a genuine effort to pay them as much as possible, this type of approach to debt settlement has a good chance of working out. Just make sure that whatever you commit to pay, you will be able to pay.

Debt Consolidation vs. Debt Settlement

Debt consolidation is when you combine several loans into a single loan to get a better interest rate and simpler payments. Debt settlement is where you call your creditors and try to get them to reduce the amount you owe.

Obviously debt settlement sounds good because it reduces the amount you have to pay. However, if you have made a commitment (a promise) to repay someone, you should do your best to repay them. However in some cases if you have fallen way behind and your original debt has aquired a high percentage of fees from late payments, etc. settlement might be an options. Credit companies may be more interested in getting what you originally owed or even a portion of what you originally owed rather than forcing you into bankruptcy. If you go bankrupt they may get nothing, or they may get less than what you could give them if you worked out a debt settlement agreement.

Moral Issues of Debt Settlement

Many times Debt Settlement is presented as a way to get out of paying what you owe. This amounts to stealing. If you intentionally go into debt with the plan to later get out of what you owe then I don’t see much difference between that and theft. However, debt settlement coupled with debt consolidation can be a wonderful gift for people who are trying make good on their debts but whose circumstances have made it extremely difficult to repay their creditors. Debt Settlement and Bankruptcy is what has generally replaced debtor’s prison from years ago. The downside of course is that some people don’t take responsibility for their actions since they know it is unlikely they will suffer any consequences.

When you buy something on credit or take out a loan you are giving your word that you will repay the person or institution that is loaning you the money. Debt settlement should be used for the rare cases where it is just completely impossible for an individual to repay their debts even after cuting all their expenses and consolidating their loans. Debt settlement should not be used as a means to live beyond one’s means–buying things and then only paying creditors a portion of the actual price.

6 quick tips to help get out of debt

Here are several quick tips to help you get out of debt. They are relevant to everyone, but particularly to people who aren’t bad enough off to consider debt consolidation. Hopefully by following these and similar principles, you can avoid debt consolidation entirely and simply pay off anything you owe.

Working your way out of debt isn’t easy. It takes a lot of self control and discipline. These six tips should help you get started.

1. Get rid of all unnecessary monthly expenses like cable television and cell phones.

2. Buy used. Many items you need can be purchased at a much reduced rate at a second hand store.

3. Delay all purchases by at least 2 days. Don’t buy anything until you’ve had 2 days to think it over. This will help reduce the number of impulse purchases you make.

4. Sell of older items that might still be of some value. Amazon is a great place for selling your used books and other items.

5. Eat in. A small investment in charcoal and lighter fluid can save you hundreds of dollars if it encourages you to stay home instead of eating out.

6. Make sure your savings goes toward getting you out of debt. Don’t just save money and then spend it in other areas.

Debt Consolidation — Not a Quick Fix

Debt consolidation is very dangerous if you try to use it as a quick fix for your personal credit problems. If you have difficulties controlling your spending, debt consolidation has the ability to make your personal financial problems 10 times worse.

How?

With most traditional consolidation programs, you take a lot of little loans and wrap them up into one big loan–often times with your house as collateral. To make the payments lower, the loan is spread out over many years. So if you have a loan on two cars that total $30,000 and a credit card debt of $20,000 and various other loans for $25,000, you can easily end up with a consolidation loan of $75,000 that is spread out over 30 years. Your payments may seem lower, but you are paying off the debt slower than your assets depreciate. You car is unlikely to run for 30 years. If you drive it for 10 years and then sell it for $1,000 you are still going to owe more money (in the consolidation loan) than the car is worth.

Obviously this is not sustainable. Sure you could try to get another consolidation loan when you by your next set of cars, but this type of strategy makes the debt pile up faster than your ability to pay things off.

Debt consolidation is only useful as part of an overall strategy that includes changing your spending habits. Your goal should be to pay off the consolidated loan as quickly as possible. If you are taking any other approach you are asking for a financial crisis.

Consolidate Debt On Business Loans

Getting a business debt consolidation loan is the recourse you ought to seriously consider when you have certain strong indicators from your business .The basic factors that might be starting to ring alarms when you consolidate debt on business loans could be:

* · Getting more and more creditor calls

* · Old debts collecting as they have not been progressively paid off

* · There ought to be a way to reduce debts found soon

* · You have no foolproof plan to have a good positive cash flow

* · Business needs a sound reliable financial plan to steer out of debt.

Whenever you feel confronted by these or similar situations then the best option is to go in for a business debt consolidation. There are big as well as smaller professional companies who can give you customized solution specific to your Business debt consolidation.Getting a business debt consolidation loan could help you in

* · Lowering your cash out flow in terms of outstanding debt installments compatible with your cash flow.

* · By bringing down the number of lenders

* · Reduce your servicing costs of debts by having lower infrastructural and administrative costs

* · An astute appraisal of your assets could also put your eligibility of borrowing in more favorable terms.

Take professional help as it is worth the money you will spend. There is a trend prevalent which claims – no gain, no fees. Look for such confident consultants who are prepared to pledge assured results.

For business debt consolidation to be effectively implemented certain basics should be clear to all concerned:

* · You should be awakened to realities of business situation

* · You are able to devote full time to business and generation of capital.

* · You are letting professionals deal with creditors.

* · You engage a professional firm for business debt consolidation

* · You are able to reduce substantially your debts which some claim as high as 70% to 80%.

* · Business debt consolidation helps in getting back to business.

Besides all these points you should take your own precaution in handing over the reins of your financial concerns to a business debt consolidation company by having it explicitly put down in your agreement with them that, any fees are payable only on success. This ensures that you need to pay only if you are able to reduce or nullify your business debts as a result of the business debt consolidation program. There is no matter to worry if you win because you end up paying a small fraction of what you saved as debt reduction. You lose nothing in terms of extra burden of fees if you are not successful. The latter is a remote possibility. Business debt consolidation companies work in tandem with your creditors, lawyers, accountants etc to chalk out the most convenient Business debt Consolidation program which will put your business on track as well as repair your credit rating ensuring that you get good rates for future borrowing too. A rate of 7.24% is an indicative value. However the real interest rate applicable to your case will be the rates prevalent in your state.

In business do what business bids you to. Avoid legal tangles as they are costly and time consuming. Try to find the practical way out. You and your creditor both operate in a market environment that calls for mutual dependence for survival. Cash in on this and do it to your advantage when you consolidate debt on business loans.

Debt Consolidation For People With Bad Credit - Where To Start?

Alot of people who forget about their debts and neglect to check out there credit score discover that they don’t have sufficient credit when they need it. Terrible credit is usually always the result of neglecting to pay credit card bills and interest. When your debts add up from credit cards, you not only have to put an end to using them, but you also run the dangers of receiving a negative credit rating in your name, reason because of “terrible credit.” One of the ways to make your bad rating good is to contact a debt consolidation company for assistance.

How can I turn my bad rating into a good rating?

The debt consolidation companies arrange such conditions with your creditors that you gain an advantage in both ways. They tempt the creditors in, bringing down the interest rate of your bills and consolidating your bills into a single one.

Aside from alleviating you of the stress the owed bills make, the consolidators make sure that the bill collectors take out all the damaging points on your credit and show you as a respectable payer. This will assist you in redeeming yourself from problems in the marketplace the next time you embark out for a lender.

How do I get out a loan for some other loan?

An additional way of prompt terrible credit repair is to get a debt consolidation loan derived from one of the companies and resolve your credit balance once and for all.

But for this loan you need to display that you meet the conditions just as in any other loan case. The loan can be in several forms; for instance, if you possess a home, then you will receive an equity loan.

A word of precaution: when determining to take up debt consolidation loan for terrible credit, you have got to run each detail soundly, from the interest rate to conditions of payment, in comparison with current conditions of payment.

Taking Out An Unsecured Debt Consolidation Loan

Debt consolidation companies attempt meet conditions that can be both beneficial to you and your debt collectors. You’re most likely mindful of all the prominent publicizing made by consolidation loan services. In virtually all of these advertisements, they teach you to come to them, take out a loan, and silence your debt collectors if you’re having difficulties making your payments every month.

What these debt consolidation companies forget to bring up is that once your previous creditors are carried off, the consolidation loan givers turn into your new creditors; and they implement tremendously higher and tight conditions of payment.

Regrettably, you may not have any other options; in which case, you may just have to choose a debt consolidation loan. Nonetheless, if you do explore this path, there are an amount of things you should keep in regard. Most important, understand that a debt consolidation loan in virtually all instances is sort of a 2nd mortgage. Whenever you come up with a problem on credit card bills, which are an unsecured debt. Taking a loan will make it secured debt. If you keep it as unsecured debt, filing for bankruptcy will dismiss the debt entirely. Nonetheless, if you make this loan a secured debt and attempt to file for bankruptcy, your creditor can take over the collateral (your home) if the loan continues to stay unpaid.

Take the time to consider whether or not this choice will be beneficial for you.
Take a glance at your balance statement and add up the time you may expect to pay it off with support of a debt consolidation company. On the other hand, think about the time you will require to pay off all debt if you take out a debt consolidation loan.

Study, examine and compare both of these state of affairs very cautiously. Deciding hurriedly may wind up pushing you into additional debt over a long period of time.

Debt Consolidation Refinance.

Debt Consolidation Refinance: Is It The Answer To All Your Debt Troubles?

Our daily demands make us to spend a lot on credit cards or by whatever means that paying creditors becomes an extremely hard and tiresome procedure.

With so much high interest rates, it appears out of the question to compensate creditors simultaneously. To help yourself overcome such state of affairs and pay the credit bills at a lower interest rate, you need to think about choosing a debt consolidation program.

Debt consolidation refinance is a similar procedure where advisors set up for you to pay the total to your creditors at a tremendously lower rate, therefore assisting you to recover your former financial position and eliminate the creditors.

Technically, what does debt consolidation refinance mean?

This astonishing plan of consolidation refinance is configured to assist the clients with a typical debt as large as $5000. This procedure assists people to compensate the debt at a lower interest rate with a single payment every month, making it a convenience for the clients.

They could therefore make themselves debt free without messing with their typical monthly budget. The consolidation refinance is a procedure which can simply pay off all your debts and relive your tension.

What is the procedure of implementing a consolidation refinance?

A person can simply choose for the plan of consolidation refinance by simply citing a refinance cash out loan. The delegator may look at the database of refinance cash-out loan programs to suit your demands. There are tons of dissimilar alternatives and tons of loan programs available, so looking for one that meets your demands isn’t at all a big project. In about 24 hours you will get the information of every loan that could meets your demands–at which degree, it’ll be up to you to pick your selection.

Frequently Used Debt Terms (Q-W)

Here is an organized list of debt terms you would find that are most commonly used in the industry.

Q

Q-form: This form consists of a series of questions a borrower needs to answer during a loan requisition.

Quality Ratios: This means the amount of income spent towards housing and household debts. The front ratio is the first qualifying ratio which means the percentage of monthly payment that is spent towards a house payment. The back ratio consists
of all the monthly debts like credit cards, car payments, student loans divided by before-tax income in addition to the house payment .

R

Rate: When a lender grants a particular amount as loan to a borrower he also charges some amount as an interest rate either annually as Annual Percentage Rate (APR) or on a monthly basis. This is known as rate.

Real Financing Cost: Real financing cost comprises of consumer rates related to varied expenditure and fees along with the time period of the loan. The complete real financing costs also include your closing fees in context of your loan amount.

Refinancing: The process of clearing off one loan with the help of a fresh loan by the same individual is known as refinancing.

Repossession: When a borrower fails to repay a particular loan amount, the creditor in most cases seizes the collateral to make up the particular loss which the present loan is worthy of.

S

Secured Debt: These types of debts are usually backed up by collateral in case the borrower fails to pay a loan within the given time. These loans are taken at times the borrower is undergoing a financial crunch. Auto loans, mortgages, are some important examples of secured debts.

Security: This is same as collateral which is given as a supportive materialistic assurance, (equivalent to the present loan amount) to creditor in case a borrower fails to repay a loan amount. The creditor in that case can sell of this additional property to retrieve his money.

Security deposit: This is an additional assurance for a lender, in case the borrower defaults while repaying the loan.

Servicing: A complete evaluation and updated transaction kept by a lender during the post loan period. This includes collection and payment of taxes, insurance, property estimations and similar type of dealings.

Simple Interest: The interest rate that is charged on the basic amount that is borrowed. This interest rate is not compounded and thus is considered to be the most lucrative.

Sign up fee: When a customer gets registered with a particular company to avail the required services, the company might end up charging a certain amount of money from the customer. This is known as sign up fee. However, now most of the companies do not charge the customers anything as sign up fees.

Student cards: These are credit cards especially designed for the use of a student. These cards have a considerably low purchase limit on them and a lower interest rate for the benefit of the students. The students with a respectable credit history find these cards convenient for their limited use.

T

Tax Impound: Money paid to a lender in relation to annual tax expenditures.

Tax Lien: When a borrower fails to pay taxes at regular intervals the lender may claim a property of the borrower to make up the tax amount.

Third Party Fees: When a lender hires a third party and avails their services he pays a particular amount of money as fees to them.

Total Payments: The entire amount a borrower pays during the life span of a loan which includes principal amount, interest rates, taxes and other financial charges.

Trade Lines: The various credit accounts that reflect on your credit report are known as Trade lines.

Trans Union: It is amongst the three largest and most popular credit bureaus in the United States.

Trustee: A person (or institution) who has legal rights and responsibilities to a property and is entrusted to use it for another’s benefit.

Truth-in-Lending Act: This is a Federal law which consists of a written document with all the terms and conditions related to a particular mortgage transaction. This documentation includes mandatory disclosure of APR, hidden fees and other relevant charges.

U

Underwriting: Procedure dealing with the evaluation of a particular property as mentioned in the appraisal report. It also deals with the borrower?s creditworthiness and capacity and willingness to repay a particular loan.

Underwriting Fee: The underwriting fee includes the total cost pertaining to the evaluation and estimation of a loan, an individual?s credit report and its latest status in order to determine an his credit worthiness as an applicant for a loan.

Usury: The additional interest charges on the legal rates that are enforced by the law.

Unsecured Debt: A debt or loan which is not backed by collateral. Unsecured debts are usually a verbal commitment that has no security attached to it in case the borrower undergoes a default during repayment of a loan amount. Personal loans, credit card bills, medical bills are some typical examples of unsecured debts.

V

Verification of Deposit (VOD): A written document signed and approved by the original creditor or the financial institution from where the borrower had taken the loan. This document verifies and authenticates the status of a borrower?s financial records and transactions.

Voluntary Lien: A lender?s legal claim for a property with the approval of the owner which includes payments for a pending debt amount and the services used.

W

Waiver: A formal written statement of renouncing a claim or right or position etc.

Wraparound: It is a process through which an anticipatory loan is merged with a new loan the interest rate of which falls in between the old rate and the current market rate. The amount of loan is generally paid to the second lender who then forwards the same to the first lender and keeps the additional amount as fee.

Wire Transfer Fee: Occasionally funds can be transferred via the inter-bank wire transfer system to you, your original creditor, or to the collection agencies. There are minimum charges as fees for this type of transfer.

Frequently Used Debt Terms (J-P)

Here is an organized list of debt terms you would find that are most commonly used in the industry.

J

Joint Account: A formal contractual relationship held by two or more individuals established to provide for regular banking or brokerage or business services. These account holders have the legal responsibility to repay the loans for all financial transaction done through this account.

Joint Liability: The liability shared among two or more individuals, who are responsible for the complete amount of debt incurred.

Joint Tenancy: An ownership of property given to each individual with equal claim in the property, including rights of survivorship.

L

Late Payment: A payment made after the due date which is made in a credit contract due to which additional charges will be imposed.

Liability on an Account: The total legal obligation to repay debt.

Late Charge: The additional charges paid by a borrower as a penalty, due to a late payment.

Lender: It can be an individual, the bank, any financial institution or mortgage broker offering the loan.

Liability: This means you are completely responsible for any financial transaction done through a card of which you are in charge of. Sometimes credit card companies may state that they are not responsible or liable if your card is misplaced, which means that they are not liable.

Lender Fees: This is the amount of money a debtor has to pay a lender as fees.

Lender Processing Fee: This fee is given for an analysis of your loan application along with the compilation of the necessary supporting documentation to close the loan.

Lien: The right to take another’s property if an obligation is not discharged.

Loan Application: An initial statement of personal and financial information required to apply for a loan.

Loan Application Fee: The lender charges this fee for the costs incurred due to the processing of loan application. This also covers the cost of obtaining a credit report, a property appraisal and the closing costs of a loan.

Loan Consolidation: The consolidation of multiple loans into one loan amount.

Loan Origination Fee: The fees a lender charges from a borrower to meet the administrative costs while a loan is being processed.

Loan Term: The time span between the closing date of the loan and the date of your last payment.

Lock or Lock-In: A lender’s guarantee of an interest rate for a set period of time-usually between loan application approval and loan closing. The lock-in protects you against increased rate during that time.

N

No credit: This refers to people with a clean credit report who did not owe any credit balance in the past. The individual must have paid off the credit with the help of a loan or credit cards.

No hassles: A dialogue or a sales pitch that assures consumers that the individual will be rendered the best quality service.

Negative Amortization: When a loan payment schedule does not meet up the full amount of interest due the principal amount increases. This is called negative amortization. The monthly amount which is less is added to the principal amount of the loan.

Notice of Default: This is a written documentation send to a borrower or a debtor if there is any failure in payment on his part or if he has gone against any company policy. Through this notice the borrower is intimidated that a legal action may be taken against him.

O

Offer Expires: This is the date of expiry of credit card validity. Even after the expiry date a consumer may enjoy certain rights which the credit card company allows him to.

Overdraft Checking: A line of credit that allows you to write checks or draw funds by means of an EFT card for more than your actual balance, with an interest charge on the overdraft.

Origination Fee: The amount charged by a lender or a creditor to meet the administrative costs incurred during the processing of a loan.

P

Personal Loan: A loan that establishes the cause of consumer credit and is granted for personal use. Categorized under unsecured loans and is based on the borrower’s integrity, ability to pay and an individual?s credit worthiness. A borrower does not put up any collateral or security to guarantee the repayment of a personal loan thus personal loan bears high interest rates.

Point-of-Sale (POS): A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks.

Power of Attorney: A legal document authorizing one person to act on behalf of another.

Prepayment Premium: Money charged for an early repayment of debt. Prepayment premiums are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.
Prepaid Expenses: Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

Prepaid Interest: Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.
Prepayment: Full or partial repayment of the principal before the contractual due date.

Prepayment Penalty: A prepayment penalty is a fee that is charged if the loan is paid off earlier than the specified term of the loan. Depending on your loan program and applicable state law, you may or may not incur a prepayment penalty. Contact your loan officer for specific information.

Prime Rate: The interest rate charged by lenders to their best, most creditworthy customers. A less credit worthy customer may be offered a loan at the prime rate plus anywhere from 2 to 10 percent. Borrowing at below-prime also occurs, but is less common and usually applies to businesses, not individual consumers. The Federal Reserve determines whether to lower or raise the prime rate based on a variety of economic factors. Many consumer loans, such as auto, home equity, mortgage and credit card loans are based upon the prime rate. Building and maintaining a good credit history are two of the most important qualifications for prime-rate borrowing.

Principal: The total amount of a loan, not including any capitalized fees or interest.

Payments: Every month you are required to put money towards what you owe which is considered your monthly payment.

Payment Schedule: The method for disclosing your payment schedule varies by loan type. For fixed-rate loans, the payment schedule indicates what your required monthly payment will be throughout the life of your loan. The payment schedule for VA, FHA, one-time MIP and uninsured conventional loans should also indicate a fixed monthly payment. The payment schedule for fixed-rate insured loans may gradually decrease over time due to a declining insurance premium. For adjustable rate loans, the payment schedules will vary by loan type and are based on conservative assumptions of future interest rates.
Personal cards: A personal credit card is used for your own use to make purchases that are needed for various reasons. This is different from a business card, which makes purchases that support or benefit a business operation.

Plastic: A slang term for a credit card.

Premium cards: This is a group of cards for people or businesses with outstanding credit. They are offered special privilege cards that have higher limits, lower interest, or no limit at all.

Prepaid credit card: Some credit card companies have cards with the option of paying first and using later. This is generally for people who have had some sort of credit difficulty. You would put money onto the card and then have that amount to spend.

Promotions: This refers to the various deals that companies offer to lure you to their business. Some deals include low interest, balance transfer rewards, points or air miles, or even money towards vehicles. If you?re in the market for a card, you can look around to see who has the best promotion.

Protection: This refers to the insurance you can have on your card to protect you in times that you may not be able to make payments, such as the loss of a job. In addition, there is insurance to protect you if your card is lost or stolen.

Provider: The company or lender from which you are obtaining a credit card.

Frequently Used Debt Terms (E-I)

Here is an organized list of debt terms you would find that are most commonly used in the industry.

E

Electronic Fund Transfer (EFT) Systems: This is the most popular way of financial transaction in the modern times. This is a electronic way of transferring funds with the use of credit cards or online payment systems, which does not have the hassle of payment through checks.

Earnest Money: This is the initial deposit made by a buyer during the purchase of a particular property. This is in evidence of a trust and good will when the purchase agreement is finalized.

Equal Credit Opportunity Act (ECOA): The Federal law of America ensures that every citizen of the country is entitled to the ECOA. The law ensures that the creditors practice no discrimination in the credit process based on age, race, color, creed, sex, religion, nationality, marital status or a candidate who earns from public assistance programs.

Equifax: This is one of the most renowned and remarkable amongst the three credit bureaus operating in the US. The other two are Experian and Transunion.

Equity: The difference between the market value of a property and the claims held against it.

Escrow: A written agreement (or property or money) delivered to a third party or put in trust by one party to a contract to be returned after fulfillment of some condition. The conditions are stated in the written agreement.

Estimated Closing Fees: An estimate of the fees which is paid by the buyer or the seller on before the closing date for service taxes and other important items required to obtain the mortgage. These fees generally average between 2% and 5% of the loan amount.

Experian: One of the largest credit bureaus operating in the United States. The other two are Equifax and Transunion.

F

Finance Charge: This is calculated on the total amount of dollars which the credit is equivalent to.

Fair Debt Collection Practices Act (FDCPA): This act ensures that the creditors maintain a set of guidelines during debt collection. This law is basically implemented to maintain peace and justice during debt collection and mostly to protect the debtor?s from the harassing behavior of the creditors.

Fair, Isaac and Co: The Company who is the inventor of the credit-scoring software.

Fee Simple: A fee without limitation to any class of heirs; they can sell it or give it away. The total or absolute ownership of real property.

FICO: Also known as the Fair, Isaac score, FICO is the most popular and well-known credit-scoring process used by the creditors. Your FICO can range from 200 to 900. Any FICO score above 720 can be termed as a good one and any score below 550 needs major attention. According to this system, the more your FICO score raises the better your prospects are to get approved for a loan.

Fixed Rate: A constant interest rate that remains unchanged during the term of loan.

Fixed-Rate Loans: Fixed-rate loans have interest rates that do not change over the life of the loan. As a result, monthly payments for principal and interest are also fixed for the life of the loan. Fixed-rate loans typically have 15-year or 30-year terms. With a fixed-rate loan, you will have predictable monthly mortgage payments for as long as you have the loan.

Float: The time interval between the deposit of a check in a bank and its payment.

Fees: A fixed charge for a privilege or for professional services. It includes various different expenses from set up to annual charges.

Financial future: This term has a vast significance in your life. Your financial future is highly dependent on how you handle your financial transactions today. A healthy amount of savings will make your future secured financially. You might have to follow a strict budget and plan your purchases very carefully today but that will build you a strong financial future ahead.

Fixed APR: An annual percentage rate that does not change over a given period of time. Some APRs are variable, which means that they change or fluctuate.

Flexible payments: This means that you have the convenience of making variable payments to a company every month according to your convenience. You do not have to abide by a strict payment amount but can be flexible based on your financial strength that month.

G

Garnishment: A court order to an employer to withhold all or part of an employee’s wages and to send the money to the court or to the person who won a lawsuit against the employee. This is a court-ordered process that takes property from a person to satisfy a debt.

Gross Monthly Income: The salary which an individual earns per month, before any taxes or expenses are deducted.

Gross Salary: The entire amount of salary earned before taxes and other deductions are made. The gross salary is different from the net salary or the take home pay, which is the amount of salary after taxes and other deductions are made. The gross and net salary is a major consideration on the amount of loan an individual can be granted.

Goals: This is a reference to a financial goal, which relates regarding the goals you have set for your life and the ways and means to achieve the mark. A goal is an aspiration and target that one desires to achieve someday.

Gold card: A premium card, the Gold card offers those with great credit ratings a much higher limit than your every day credit card. For e.g. if an average credit card limit is $2000 the average Gold card limit is likely to be $6000.

Grace period: A time period when a lender will give you as a grace during which you are not charged interests and need not make payments.

Guarantee: This term means to be assured that something will come through, whether you get a low interest guarantee or a guaranteed approval.

H

Hazard Insurance: In case there is a loss due to fire or natural calamity an individual is assured protection. This is done in exchange for a premium which is paid to the insurer.

Home Equity Line of Credit: This is a credit line which is fixed once your home loans are paid in full. This has got a high credit limit which an individual can take loan from as and when required. It is somewhat similar to a credit card.

I

Interest free: As the name suggests, there will be no interest rates charged for any financial transaction. But obviously there would be some terms and conditions.

Introductory interest rates: In order to give you an attractive deal many companies waive off or lower your introductory interest rates. However after a period of time these low rates might change and you might have to pay high rates like other companies charge you. The only positive side to it is that, you might be offered a low interest rate in your balance transfer and save some money in the interest which you are paying.

Impound Account: This is also known as an Escrow Account. The lender hold reins to this account where the borrower pays the monthly mortgage installments for overall annual expenditure. This may include the taxes and insurance. The lender passes over the money of this account when they have matured.

Initial Rate: The amount charged on a lender during the first phase of an ARM (Adjustable Rate Mortgage) loan.

Interest: The additional fee a lender charges on the original loan amount for allowing the borrower to use his funds for a given time period.

Interest Rate: The amount of money a lender charges a borrower for lending giving him the financial support. The rate is calculated by dividing the total amount of interest charged by the loan amount.

Interest Rate Cap: This is implemented to safeguard Consumer rights that, limit the amount of the interest rate on an ARM loan. This can however change in an adjustment within an interval or during the entire period of loan.

Interest Rate Disclosure: A complete evaluation of the terms and conditions applicable to the processing of a loan and also the description of the interest rate agreement.

Frequently Used Debt Terms (A-D)

Here is an organized list of debt terms you would find that are most commonly used in the industry.

A

1 year adjustable (ARM): A loan with a fixed rate for the first 1 year after which the rate changes once each year for the remaining life of the loan. Because the interest rate can change after the first 1 year, the monthly payment may also change.
The same is applicable in case of 10, 2, 3, 5 and 7 year of adjustable (ARM).

A-Credit: The ideal credit rating for a consumer. Having a good credit score lowers the prices which the lenders usually offer you. Usually a FICO score above 720 fetches you the best deal.

Acceleration Clause: This clause allows the lender to speed up the rate of your loan. In such cases the lender can also demand immediate payment of the entire balance of the loan you owe. This happens if you fail to satisfy the legal obligations in the contract.

Accrued Interest: When you fail to pay your interests within a given period, the interest increases and adds to the debt amount you owe.
Adjustment Interval: This is the span of time in between the alteration in the interest rate or monthly payment on an ARM loan.

Affordability: This is a general evaluation of the amount of money you can afford while purchasing a home. The affordability factor gives the consumer a probable price which can be allotted against their affordability factor. It also mentions about the mortgage required to pay that amount.

Agreement of Sale: A contract signed by buyer and seller mentioning the terms and conditions during the sale of a property.

Alternative Documentation: This is a document related to a loan file which is dependent on information such as pay-stubs, W-2 forms, and bank stubs. This is done without depending on verifications sent to third parties for confirmation of statements made on the application.

Amortization: This deals with the periodic repayment of a loan considering payments of both principal amount and interest rates calculated to payoff the loan at the end of a fixed period of time. The loan balance lessens by the amount of the scheduled payment, or with the deposit of any extra payment. The scheduled payment minus the interest amount equals amortization.

Amount Financed: This figure is used to calculate your APR. It represents your loan amount minus any prepaid finance charges and assumes you will keep the loan to maturity and make only the required monthly payments.

Annual Fee: A credit card issuer may charge you a fee each year for your account.

Annual Percentage Rate (APR): There are two interest rates applied to your loan: the Actual Interest Rate and the Annual Percentage Rate. The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the “note rate”), and is the rate used to calculate your monthly payments. The amount of interest you pay, as determined by your Actual Rate, is only one of the costs associated with your loan; there may be others. The Annual Percentage Rate (APR) includes both your interest and any additional costs or prepaid finance charges you might pay such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.

Application: An initial statement of personal and financial information required to apply for a loan.

Application Fee: Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges.

Appraisal: A written analysis of the estimated value of a property, as prepared by a qualified appraiser. A fee is typically charged for a real estate appraisal because a home appraisal is time-consuming. An appraisal of an auto is usually not necessary because auto dealers, sellers and buyers all have quick access to the market value of autos.

Appraisal Fee: The charge for estimating the value of property.

Asset: Anything that has monetary or exchange value that is owned by an individual, business or institution. Assets include real estate property, personal property, vehicles and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on). A lender is very interested in the amount and value of any assets you may have because assets can be used as collateral against a loan. Along with other factors such a borrower’s credit rating, assets are also used to help determine the amount of the loan.

Assignment: The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.

Assignment Recording Fee: In many instances, after closing the lender transfers your loan to a specialized loan “service” who handles the collection of your monthly payments. The Assignment Fee covers the cost of recording this transfer at the local recording office.

Assumption: The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt.

B

Backup Offer: There is always a provision of an alternate bid or second offer on a property if the first offer does not work out. However, this second offer has to be accepted.

Balance: The amount of the loan which is unpaid. It is equal to the loan amount minus the sum of all prior payments to the principal.

Base Loan Amount: The original loan amount on which loan payments are based. If additional charges accrue, those costs are added to the original loan amount.

Bank Draft: This is a mode of payment where your loan is automatically deducted from your checking or savings account. In such cases you don’t have to mail in your payment each month.

Bankruptcy: When a person is unable to meet his financial obligations he is declared bankrupt by a decree of the court. The Federal Bankruptcy Law states that this person’s property is then used to satisfy the creditors. He can relieve the debts by transferring his assets to a trustee to clear his debts. Different chapters or types of bankruptcy exist amongst which Chapter 7 and Chapter 13 are the most popular ones.If a person files bankruptcy, a record of the filing appears on the borrower’s credit report for up to 10 years.
Bequest: A personal property which has been gifted to an individual and this arrangement is mentioned in the will.

Billing Error: According to the FCBA or Fair Credit Billing Act any mistakes in your monthly statement is known as a billing error.
Bona Fide: Undertaken in good faith.

Borrower: A person who takes money in the form of a loan and is committed to pay it back. This repayment in most cases has an additional interest amount added to the original amount of money borrowed.

Broker: An individual who assists in arranging for funds and also negotiates contracts for a client. However this individual does not borrow money for his individual purpose.

Budget: A personal financial record which has the figures of all the income and expenditure done within a specific time limit of all money spent and earned in a specific time frame.

Business Days: According to the Truth in Lending Act or Electronic Fund Transfer Act there are specific days allotted for business dealings. These days are known as business days.

Buyer’s Market: The market prices which are favorable for the consumers is known as a buyer?s market. When due to the price factor sell is less and the buyers are much higher, sellers may be forced to make a considerable price deduction.

C

Cash-out Refinance: This is a transaction in which the borrower receives additional cash he can use for any purpose. Cash-out refinance happens when a borrower receives a greater amount of money in a fresh loan when compared to the money he uses to pay his debts.

Closing: The meeting between the buyer, seller and lender. When the property and funds legally change hands there is a interaction or meeting between the buyer, seller, and the lender. This is known as closing or settlement.

Collateral: This is a piece of property or asset offered to support a loan. This property can be seized or taken away legally if you fail or can be seized if you default.

Collection Agency: When a borrower is unable to pay off his debts within the allotted time period, the original creditor appoints a company to collect the debts on his behalf. This company is known as the Collection Agency. The Collection Agency gets a certain percentage from the original creditor as their fees.

Commitment: A written document or agreement between a lender and a borrower on a loan amount or any monetary transactions. This document is backed by certain terms and policies for a stipulated period of time.

Cosigner: The cosigner is the third person other than the borrower and lender, who is a witness to the loan. He signs on doted lines and is equally responsible for your loan.

Credit: A particular sum of money granted by a creditor with the provisions for the borrower to pay in the future. It also means an amount of money an individual owes to a person or business.

Credit Bureau: An agency that maintains the records of your credit record and issues it to you when required.

Credit Card: Also known as plastic money, this is a card used to borrow money or buy goods for personal use.

Credit History: The overall financial record of the monetary transactions you dealt with. It shows the amount of money you borrowed, the amount you repaid and the sum which you still need to pay back.

Credit Limit: The maximum amount of money you may charge to a particular account. For example, if your credit limit on a credit card is $10,000, you total transaction cannot exceed $10,000.

Credit Ratio: The percentage calculated based on a debtor?s monthly payable installment amount divided by his net earnings, is known as the credit ratio.

Credit Report: The credit report is a financial document which consists of a person?s credit history and also reflects his updated financial position. A credit report determines an individual?s credit worthiness. An individual can acquire his credit reports from credit bureaus.

Credit Reporting Company: These are companies that compile reports on an individual?s credit history from multiple credit repositories and merge them into a wholesome credit report.

Credit Repository: Companies that gather financial information on an individual?s credit history and gives the updated feedback to credit reporting companies.

Credit Scoring System: This is a highly statistical process used to grade individuals who have applied for credit, based on the various characteristics applicable to creditworthiness.

Credit Warranty: This is a written guarantee or commitment about the creditworthiness of the borrower given by the seller of the loan. The seller guarantees that the main intention of the borrower is to repay the loan under any condition and that he has got a good reputation in handling credit.

Creditor: A person or a financial house who lends money or you owe money.

Credit-related Insurance: This can be insurance related to health, life, or accident designed to repay the outstanding balance of debt.

Creditworthiness: Relates to past credit records and future ability to repay debts based on your current financial position.

Consumer: A person who purchases material goods for his personal use.

Consumer Credit Counseling Service (CCCS): Organizations which help consumers find a way to repay debts through careful budgeting and management of funds. These are usually nonprofit organizations, funded by creditors. By requesting that creditors accept a longer payoff period, the counseling services can often design a successful repayment plan.

Credit Repair Companies: The credit clinics can be in the form of any individual or company which helps debt sick people to recover from their financial crisis and take care to clean up their bad debts.

Credit Grantor: Person or any business house supplying consumer goods in credit system.

Credit type : This is a reference to the type of credit you are undergoing. This type of credit is highly related to your credit history. If you are regular and a punctual in your payments, you are supposed to have a good credit type.

D

Debt Consolidation: This is a process where your multiple debts are consolidated into one loan amount. Debt consolidation saves you from the harassment of the creditors and also gives you the leverage of repaying your debts in affordable monthly installment. In a debt consolidation program a major percent of your debt amount is eliminated. All the late fees and hidden taxes are also eliminated. Usually one can pay off their debts within a reasonable period of time with the help of such programs. However the time period to clear a particular debt depends on the type and amount of debt a person is undergoing.

Debit Card (EFT Card): A plastic card which consumers may use to make purchases, cash withdrawals, or other types of electronic fund transfers. But with a debit card a person may not take any credit through purchase or cash withdrawal.

Debt-to-Income Ratio: It is the proportion of debt you owe in relation to your income. It is calculated on the basis of debt divided by income.

Deed: A legal document which is a documentation and proof of a particular property, when it is transferred from one owner to another. The deed basically contains a description of the concerned property, the signatures of both the parties and witnesses and is handed over to the buyer at closing.

Deed of Trust: A legal document that conveys title to real property to a third party. The third party holds title until the owner of the property has repaid the debt in full.
Default: If the debtor fails to meet the commitments in legal obligations which are mentioned in the contract, it is known as default.

Deferred Interest: Deferred Interest or Negative Amortization takes place when your monthly repayment towards a loan is not enough to meet the interests due on the loan, and eventually gets added to the original balance of the loan. This is dangerous because the borrower at the ends is obligated to pay a greater amount than he actually borrowed.

Delinquency: When you fail to abide by the loan agreement and miss out on making payments within the time period, delinquency takes place.

Disclosures: Information conveyed to a consumer in context to his financial transactions is known as a disclosure.

Discount Points: It is a percentage of the mortgage loan which is paid to the lender by the borrower in order to lower the interest rate on the loan. Generally one point equals one percent.

Document Preparation Fee: Such fees are given to companies who are appointed to prepare the loan closing documents.

Due-on-Sale Clause: The provision or leverage enjoyed by a lender in a mortgage or deed of trust, where he can claim immediate balance of the loan upon sale of the property.