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TWO CENTS: Essential Banking Terms to Know

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TWO CENTS – July 2018 Essential Banking Terms to Know

Banking has many industry terms and concepts that can be difficult to understand. Here are 6 terms you might hear in a conversation about a loan:

APR is Annual Percentage Rate - the annual cost of credit as a percentage over the term of the loan.

DTI or Debt to Income Ratio – Total monthly payments (including new loan payment) divided by total gross monthly income.

Ceiling Rate – The maximum a rate can adjust to on an adjustable rate loan.

LTV or Loan to Value – determines lendable equity (total liens against property, dived by the value)

Revolving Line of Credit – open ended line of credit with no specified maturity date. Payments vary based on outstanding balance.

Third Party Costs – Outside costs incurred for a loan such as evaluation costs, title company fees, recording fees and property searches.

With banking and finance such an important part of our daily lives, taking time to understand terms can yield beneficial results. Never be afraid to ask questions, and keep asking, until you understand.

At Nevada State Bank, we believe It Matters Who You Bank With.

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