Glossary

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Aa

Account Agreement

an account agreement is a contract governing a customer’s open-end credit account, the agreement provides information on changes occurring in the account and sets out rights and responsibilities of a customer concerning his/her account

Account History

Refers to all activity within an account, usually since inception, the account history includes all transactions initiated by the account holder as well as passive entries (such as interest on balances, which are credited to the account). The account history is also called a “ledger”, depending on where the account is held.

Account Holder

a party authorized to use an account as they see fit, this is done by signing forms consenting to amange an account

Accounts Payable

is an accounting entry that represents an entity’s obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities.

Accrued Interest

the term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received,  occurs as a result of the difference in timing of cash flows and the measurement of these cash flows

Acquiring Bank

bank which processes a merchant’s credit card sales, and credits them to the merchant’s account

Activity

the condition in which things are happening or being done.

Adjustable Rate Loan

is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets, the loan may be offered at the lender’s standard variable rate/base rate

Adjustable Rate Mortgage

a type of mortgage in which the interest rate paid on the outstanding balance varies according to a specific benchmark, a mortgage having an interest rate which is usually initially lower than that of a mortgage with a fixed rate but is adjusted periodically according to the cost of funds to the lender

Adverse Action

an action that denies an individual or business credit, employment, insurance or other benefits, an adverse action is generally taken by a business or government based on a criminal past or information found in credit reports

Adverse Action Notice

is a letter sent about 7 to 10 business days after you’ve had an application – credit, loan, insurance, employment, etc. – denied, is a creditor’s action refusing a credit application

Affidavit

a sworn statement in writing made especially under oath or on affirmation before an authorized magistrate or officer

Agency Budget Matrix

is a document showing the disaggregation of agency expenditures into the following components: by agency, by locality, by fund, by program/activity/project, by allotment class, by source of appropriation, by specificity of appropriation, by need of clearance.

Allotment

refers to the allocation of shares granted to each participating underwriting firm during an initial public offering (IPO).

Allotment Release Program

Overall ceiling of the total obligational authority which may be issued to the agencies for the year, from all fund sources.

Alteration

the act, process, or result of changing or altering something

Amortization

is the paying off of debt with a fixed repayment schedule in regular installments over a period of time, similar to depreciation which is used for tangible assets, and to depletion which is used with natural resources, roughly matches an asset’s expense with the revenue it generates, is an accounting term that refers to the process of allocating the cost of an intangible asset over a period of time, it also refers to the repayment of loan principal over time

Amortize

to pay money that is owed for something (such as a mortgage) by making regular payments over a long period of time

Annual Percentage Rate

is the annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan, is the interest rate that reflects all the costs of the loan during a one year time period

Annual Percentage Yield

is the effective annual rate of return taking into account the effect of compounding interest, is a normalized representation of an interest rate, based on a compounding period of one year

Application

request, petition, a form used in making a request, an act of applying

Application Fee

a fee charged by a lender,ostensibly for the time and trouble involved in processing a loan request, analyzing available data, and calculating what terms and conditions to offer

Appraisal

a valuation of property by the estimate of an authorized person, is a valuation of property (ie. real estate, a business, an antique) by the estimate of an authorized person, in order to be a valid appraisal, the authorized person will have a designation from a regulatory body governing the jurisdiction the appraiser operates within.

Appraiser

a practitioner who has the knowledge and expertise necessary to estimate the value of an asset, or the likelihood of an event occurring, and the cost of such an occurrence, acts independently of the buying and selling parties in a transaction in order to arrive at the fair value of an asset without bias

Appropriation

is the act of setting aside money for a specific purpose. A company or a government appropriates funds in order to delegate cash for the necessities of its business operations.

Arbitration

a process of settling an argument or disagreement in which the people or groups on both sides present their opinions and ideas to a third person or group

Arrangement fee

a charge made by a bank to a client for arranging credit facilities, charge made by lenders for arranging credit – usually for a mortgage or for a business loan and sometimes for car finance

Arrears

the state of being behind or late, especially in the fulfillment of a duty, promise, obligation, or the like, the state of being behind in the discharge of obligations

Assumed Liabilities

The debts that a company agrees to be responsible for paying when it buys another company.

Authorization

a legislative act authorizing money to be spent for government programs that specifies a maximum spending level without provision for actual funds

Automatic Bill Payment

a money transfer scheduled on a predetermined date to pay a recurring bill, automatic bill payments are routine payments made from a banking, brokerage or mutual fund account to vendors

Available Balance

Amount in a checking or savings account that is immediately available for use , balances in checking or on-demand accounts where there is a delay in crediting funds to an account

Available Credit

the unused portion of an open line of credit, such as a credit card or a revolving loan (such as a home-equity line of credit)

Bb

Balance Of Payments

is the method countries use to monitor all international monetary transactions at a specific period of time.

Balance Transfer

a balance transfer is where part or all of a debit balance (or debt) you owe to another lender is transferred from one credit card to another, usually to save money on interest rates. the transfer of all outstanding balances from one credit card to a new credit card, credit card balance transfers are typically used by consumers who want to move their debt to a credit card with a lower interest rate, fewer penalties or other benefits, such as reward points or travel miles

Balanced Budget

is a situation in financial planning or the budgeting process where total revenues are equal to or greater than total expenses.

Balloon payment

an oversized payment due at the end of a mortgage, commercial loan or other amortized loan, because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender

Bank Custodian

a custodian is a financial institution that holds customers’ securities for safekeeping so as to minimize the risk of their theft or loss, a custodian holds securities and other assets in electronic or physical form

Bank Examination

is a regular process of ensuring that a bank or lending institution is financially stable and obeying regulations while avoiding excessive risk, an evaluation of the safety and soundness of a bank

Bank Statement

a monthly statement of account mailed by a bank to each of its customers with checking or other accounts, recording the banking transactions and current balance during a period and usually including canceled checks

Banking Day

a banking day means a day on which a bank is open to the public for carrying on substantially all of its banking functions, is the business day of a bank, includes all the days when offices of a bank is open for business to public

Bankrupt

any insolvent debtor; a person unable to satisfy any just claims made upon him or her, a person who is lacking in a particular thing or quality, a person who has done any of the acts that by law entitle creditors to have his or her estate administered for their benefit

Bankruptcy

a legal proceeding involving a person or business that is unable to repay outstanding debts, a condition of financial failure caused by not having the money that you need to pay your debts

Beneficiary

a person, organization, etc., that receives money or property when someone dies., a person designated as the recipient of funds or other property under a will, trust, insurance policy, etc., A beneficiary is anybody who gains an advantage and/or profits from something

Billing Cycle

the interval of time during which bills are prepared for goods and services that a company has sold, a billing cycle is recurring and is most often set to repeat on a monthly basis, cycle for a credit card or any type of monthly account is the period of time between billings

Billing Error

any mistake on a bill resulting from the seller’s mistake., for example, a company may add what is owed incorrectly or accidentally omit a credit it should have included

Borrower

a legal term for a person or entity that obtains funds from a business or individual for a specified period of time upon condition of promising to repay the loan

Borrowings

Receiving something of value in exchange for an obligation to pay back something of usually greater value at a particular time in the future.

Broker Compensation

a fee paid based on a percentage of the sale made by an employee or agent, as distinguished from regular payments of wages or salary

Broker Fee

a fee paid based on a percentage of the sale made by an employee or agent, as distinguished from regular payments of wages or salary

Budget

is an estimation of the revenue and expenses over a specified future period of time and is compiled and re-evaluated on a periodic basis.

Budget Deficit

is most commonly used to refer to government spending rather than business or individual spending.

Budgetary Support

is a particular way of giving international development aid, also known as an aid instrument or aid modality.

Business Day

a measurement of time that typically refers to any day in which normal business is conducted, is generally considered to be Monday through Friday from 9am to 5pm local time, and excludes weekends and public holidays

Cc

Canceled Check

is a check that has cleared the depositor’s account and has been marked as “canceled” by the bank, is a check that has been paid by the bank

Capital Outlays

is money a company spends to either purchase a fixed asset or to extend its useful life.

Car loan

a personal loan to purchase an automobile

Cash Budget

is an estimation of the cash inflows and outflows for a business or individual for a specific period of time.

Cash-out Refinancing Loan

a mortgage refinancing transaction in which the new mortgage amount is greater than the existing mortgage amount, plus loan settlement costs, the purpose of a cash-out refinance is to extract equity from the borrower’s home. A cash-out refinance is an alternative to a home equity loan

Cashier’s Check

a check written by a financial institution on its own funds. It is then signed by a representative of the financial institution and made payable to a third party, a customer who purchases a cashier’s check pays for the full face value of the check and usually also pays a small premium for the service

Cease and Desist Letter

first legal step whereby an aggrieved party demands the offending party to immediately stop any further acts of violation of its rights

Certificate of Deposit

a written acknowledgment of a bank that it has received from the person named a specified sum of money as a deposit, often for a fixed term at a specified interest rate, a money-market bond of a preset face value paying fixed interest and redeemable without penalty only on maturity

Certificate of Release

a certificate of release is a certificate signed and issued by a bank indicating that a mortgage with a bank is fully paid

Certified Check

is a type of check where the issuing bank guarantees the recipient of the check that there is enough cash available in the holder’s account to be transferred when the check is used and also that the account holder’s signature on the check is genuine, typically used in situations where the recipient is unsure about the creditworthiness of the account holder and doesn’t want to the check to bounce

Charge-off

is a term describing an expense on a company’s income statement, is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected

Check

a written order directing a bank to pay money as instructed, a ticket or token showing ownership or identity or indicating payment made, a slip indicating the amount due

Check Truncation

is the conversion of a physical cheque into a substitute electronic form for transmission to the paying bank

Checking Account

a bank account from which you can take money by writing checks, a bank deposit against which checks can be drawn by the depositor

Closed-End Credit

is a loan or extension of credit in which the proceeds are disbursed in full when the loan closes and must be repaid, including any interest and finance charges, by a specified date, may require periodic principal and interest payments, or may require the entire payment of principal at maturity

Closing Costs

are the expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction

Collateral

of, relating to, or being collateral used as security (as for payment of a debt or performance of a contract), is a property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses

Collected Funds

cash deposits or checks that have been presented for payment and for which payment has been received

Collection Agency

a company hired by lenders to recover funds that are past due or accounts that are in default, the lending company itself may also have a division or subsidiary that acts as its collection agency, a collection agency is often hired after a company has made multiple attempts to collect its receivables

Collection Items

sight draft or time draft, usually accompanied by shipping and other documents, presented to an importer or buyer for acceptance or payment

Comaker

Person who, with other individual(s), guarantees a financial commitment (such as repayment of a loan). He or she is jointly and severally liable, with the other signatories (co-makers), for honoring the commitment in full

Commitment Fee

is a fee charged by a lender to a borrower for an unused credit line or undisbursed loan. A commitment fee is generally specified as a fixed percentage of the undisbursed loan amount.

Commodity Loans

is the price per unit (pound, bushel, bale, or hundredweight) at which the Commodity Credit Corporation (CCC) provides commodity loans to farmers to enable them to hold commodities for later sale, to realize marketing loan gains, or to receive loan deficiency payments (LDPs).

Common Fund Concept

is a form of collective investment scheme based upon contractual law rather than being enacted through a trust, corporation or insurance policy.

Consumer Credit Association

Short-term loans made to enable people to purchase goods or services primarily for personal, family, or household purposes.
Consumer credit transactions can be classified into several different classes.Installment credit involves credit that is repaid by the borrower in several periodic payments; loans repaid in one lump sum are classified as noninstallment credit. Installment credit has expanded in popularity, with an increasing number of consumers buying goods on credit in order to spread repayment of the purchase price and the interest owed on the principal borrowed over an extended time.

Conventional Fixed Rate Mortgage

a “fixed-rate” mortgage comes with an interest rate that won’t change for the life of your home loan and a “conventional” (conforming) mortgage is a loan that conforms to established guidelines for the size of the loan and your financial situation, Conventional loans often feature lower interest rates than jumbo loans, FHA loans or VA loans

Cosigner

a person who signs an official document (such as a loan, contract, or law) with another person, person who signs a document (instrument) together with other person(s) and thus becomes a co-obligor

Counterpart Fund

is a technique for turning foreign aid into reserves of domestic currency. They were used by the UNRRA, and the Marshall Plan in the rebuilding of Western Europe after the Second World War, and today remain a common technique for delivering developmental assistance.

County court judgement

is an order from the County Court instructing you to repay a debt, if you receive a Summons, or County Court Claim Form, it means a lender has decided to take legal action against you to recover the money

Courier Fee

cost for delivering documents to all those involved in a real estate deal, which they pay when the transaction closes

Credit Application

a credit application is a request for an extension of credit, either orally or in written form, documentation that is completed by an individual or business seeking to apply for a line of credit with a lending institution

Credit Card Account Agreement

is a contract that outlines the terms, conditions, pricing, and penalties of the credit card.

Credit Card Issuer

a bank or other financial institution that issues credit cards, makes the credit limit available to cardholders and is responsible for sending payments to merchants for purchases made with credit cards from that bank

Credit Disability Insurance

Credit disability insurance alleviates your obligation to make loan payments if you become disabled and can’t work. If you purchase this policy, the insurance company will make your payments on your behalf.

Credit file

a collection of data about an individual’s borrowing and repayment activity, contains the information that determines your credit score

Credit Life Insurance

is a life insurance policy designed to pay off a borrower’s debt if that borrower dies

Credit Limit

the amount of credit that a financial institution extends to a client, also refers to the maximum amount a credit card company will allow someone to borrow on a single card, usually determined based on information contained in the application of the person seeking credit, or that person’s credit rating

Credit Report

a report detailing a person’s financial history specifically related to their ability to repay borrowed money, a detailed report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness

Credit Score

is a statistically derived numeric expression of a person’s creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts, is based on among other things, a person’s past credit history, is a number between 300 and 850 – the higher the number, the more creditworthy the person is deemed to be

Credit search

the process of evaluating an applicant’s loan request or a corporation’s debt issue in order to determine the likelihood that the borrower will live up to his/her obligations. also called credit analysis

Cut-Off Time

a time of day established by a bank for receipt of deposits, after the cut-off time, deposits are considered received on the next banking day

Dd

Data Protection Act

it gives individuals the right to know what information is held about them, and provides a framework to ensure that personal information is handled properly, controls how your personal information is used by organisations, businesses or the government

Debit

an accounting entry that results in either an increase in assets or a decrease in liabilities on a company’s balance sheet or in your bank account.

Debit Card

a card like a credit card by which money may be withdrawn or the cost of purchases paid directly from the holder’s bank account without the payment of interest, a payment card that deducts money directly from a consumer’s checking account to pay for a purchase

Debt Collector

a company or agency that is in the business of recovering money that is owed on delinquent accounts, are hired by companies to which money is owed by debtors, operating for a fee or for a percentage of the total amount collected

Debt consolidation

the combining of several unsecured debts into a single, new loan that is more favorable, involves taking out a new loan to pay off a number of other debts, the new loan may result in a lower interest rate, lower monthly payment or both, consumers can use debt consolidation as a tool to make it easier to get out of student loan debt, credit card debt and other types of debt that aren’t tied to an asset

Debt Elimination Scheme

generally involve websites advertising a legal way to dispose of mortgage loans and credit card debts.

Debt-to-Income Ratio

a personal finance measure that compares an individual’s debt payment to his or her overall income, a debt-to-income ratio (DTI) is one way lenders (including mortgage lenders) measure an individual’s ability to manage monthly payment and repay debts

Debtor

a person, organization, government, etc., that owes money., a person who is in debt or under financial obligation to another

Decedent

A person who is no longer living, a dead person

Deed of Trust

agreement under which a borrower (the trustor) conveys (see conveyance) the right of ownership (title) of his or her assets or property to a trustee as a security for the sum advanced by a lender (the beneficiary of the trust)

Deferred Payment

a loan arrangement in which the borrower is allowed to start making payments at some specified time in the future, deferred payment arrangements are often used in retail settings where a person buys and receives an item with a commitment to begin making payments at a future date

Delinquency

something, as a debt, that is past due or otherwise delinquent, the condition of someone who owes money and is not making payments at the required or expected time

Demand Deposit

an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days’ notice consist of funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution

Deposit Slip

a piece of paper that a person includes with a bank deposit to show how much money he or she is putting in an account, a slip for listing deposits made to a bank account

Derogatory Information

information on a person’s credit report that can be legally used to turn down a loan application; it includes late payments, charge-offs and bankruptcies, as a general rule, derogatory information remains on a person’s credit report for seven years; but there are exceptions, including bankruptcies, which can remain for 10 years

Direct Deposit

a way of paying someone so that the money is sent directly into the person’s bank account without the use of checks or cash, is a method of payment where a paying party, such as an employer or government agency, electronically transfers a payment in cash from its bank account into the bank account of the payee

Direct Dispute

a dispute submitted directly to a furnisher (including a furnisher that is a debt collector) by a consumer concerning the accuracy of any information contained in a consumer report and pertaining to an account or other relationship that the furnisher has or had with the consumer.

Disclosures

is the act of releasing all relevant information pertaining to a company that may influence an investment decision

Draft

an order for the payment of money drawn by one person or bank on another, a written ​order for ​money to be ​paid by a ​bank

Drawee

is a legal and banking term used to describe the party that has been directed by the depositor to pay a certain sum of money to the person presenting the check or draft

Drawee bank

Bank named in a letter of credit on whom drafts are to be drawn for payment

Drawer

a person who draws an order, draft, or bill of exchange, one that draws a bill of exchange or order for payment or makes a promissory note

Ee

Early redemption charge

A fee that some mutual funds assess when a shareholder redeems shares from the fund during a certain, usually brief period of time after purchase. It may be a flat fee or a percentage of the value of the shares redeemed. Mutual funds charge redemption fees to discourage new investors from withdrawing from the mutual fund if the fund’s net asset value drops unexpectedly.

Electronic Banking

banking transactions conducted through computerized systems, as electronic funds transfer by automated-teller machines, intended to speed operations, reduce costs, etc., the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale

Electronic Check Conversion

a payment process in which you give a payee a check, but the actual payment is processed as an electronic funds transfer, the payment is automatically debited from your account using the account, routing information, and bank ID information on your check, which is either voided and returned to you or destroyed

Electronic Funds Transfer

is a transaction that takes place over a computerized network, either among accounts at the same bank or to different accounts at separate financial institutions

Embezzlement

to appropriate fraudulently to one’s own use, as money or property entrusted to one’s care., an act withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes

Enforcement Action

action by a body or organization, esp a financial one, to make sure that its rules are being followed

Equity

the value of a piece of property (such as a house) after any debts that remain to be paid for it (such as the amount of a mortgage) have been subtracted, the money value of a property or of an interest in a property in excess of claims or liens against it

Error Resolution

a procedure that allows consumers to dispute bookkeeping errors or unauthorized transactions related to their commercial bank accounts

Exception Hold

means that the account is over 30 days old, but the bank has reason to believe the check won’t clear and so they are given the right to place these items on hold for up to 11 business days

Ff

Fees

an amount of money that must be paid, a charge or payment for professional services

Fiduciary

one who is responsible for managing the assets of another person, or of a group of people

Finance Charge

a fee charged for the use of credit or the extension of existing credit, may be a flat fee or a percentage of borrowings, with percentage-based finance charges being the most common

Finance Companies

an institution engaged in such specialized forms of financing as purchasing accounts receivable, extending credit to retailers and manufacturers, discounting installment contracts, and granting loans with goods as security

First Mortgage

a first mortgage is a mortgage in a first lien position on the property that secures the mortgage, has priority over all other liens or claims on a property in the event of default

Fixed rate

an interest rate that does not change over the life of the loan, a loan in which the interest rate does not change during the entire term of the loan. opposite of adjustable rate

Fixed Rate Loan

a loan in which the interest rate does not change during the entire term of the loan

Fixed Rate Mortgage

is a mortgage that has a fixed interest rate for the entire term of the loan

Flood Certification Fee

a fee that must be paid for an assessment to determine whether a property resides in a flood zone, when a residential home is found to lie within a flood zone, flood insurance is required before closing the sale

Foreclosure

an act or instance of foreclosing specifically a legal proceeding that bars or extinguishes a mortgagor’s right of redeeming a mortgaged estate

Foreign National

is a person who is not a citizen of the host country in which he or she is residing or temporarily sojourning, a person residing in a country without the right to permanent residence in that country

Forged Check

a check on which the drawer’s signature is forged or unauthorized, such a check is meaningless as far as the drawer whose signature is forged is concerned

Fraud Alert

is a notice added to your credit file that alerts creditors that you may be a victim of fraud, including identity theft and encourages creditors using the file to take certain steps to verify your identity prior to establishing any new credit accounts in your name, issuing a new card on an existing account, or increasing the credit limit on an existing account

Fully Amortizing

is a loan in which both principal and interest are paid fully through scheduled installments by the end of the loan term

Furnisher

a company that provides information about a consumer, including credit history, to a credit bureau, organizations that provide financial services, such as banks and credit card companies, but may also include debt collection agencies and other companies that process financial information

Gg

Garnishment/Garnish

A legal process whereby payments towards a debt owed by an individual can be paid by a third party – which holds money or property that is due to the individual – directly to the creditor. The third party in such a case is generally the individual’s employer and is known as the garnishee .

Good Faith Estimate

an estimate of the fees due at closing for a mortgage loan that must be provided by a lender to a borrower within three days of the lender taking a borrower’s loan application

Government Recording Fees and Taxes

Taxes are generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in order to finance government activities. While Recording Fee is the fee charged by a government agency for registering or recording a real estate purchase or sale, so that it becomes a matter of public record.

Guaranteed Student Loan

a student loan on which repayment is guaranteed by a third party, especially the U.S. federal government, a student loan is financing used to pay for one’s education, especially at the postsecondary or technical level

Guarantor

a person who makes or gives a guarantee, guaranty, warrant, etc., a person who promises to pay back a loan if the original borrower does not pay it back

Hh

Hold

to ​keep ​money or an ​investment, and not ​sell it

Home Equity Loan

a consumer loan secured by a second mortgage, allowing homeowners to borrow against their equity in the home

Homeowner loan

are debts that are secured against your property and, as such, they are only available to homeowners with equity

Homeowner’s Hazard Insurance

will cover unintentional damage or destruction by fire, smoke, wind, hail, theft, vandalism, or another similar event.

Ii

Individual Account

a brokerage account opened in the name of one person

Indorsement

the signature, instructions, etc., placed on the reverse of a commercial document, for the purpose of assigning the interest therein to another, a clause under which the stated coverage of an insurance policy may be altered

Installment sale

a transaction in which the sales price is paid in two or more installments over two or more years, a method of sale that allows for partial deferral of any capital gain to future taxation years

Institutional lender

Institutional investors who invest a substantial part of their funds in corporate, government, and municipal debt securities (bonds, debentures, notes) or participate in mortgage loan pools, Any lending organization large enough to be regulated under a country’s lending regulations.

Insufficient Funds

situation where available money to cover a transaction is not present in an account, occurs when an account cannot provide adequate funds to satisfy the demand of a payment

Insured Deposits

The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of date of closure, but not to exceed P500,000.00

Interest

a charge for borrowed money generally a percentage of the amount borrowed, the profit in goods or money that is made on invested capital, an excess above what is due or expected

Interest Rate

the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).

Interest Rate Index

an index that is based off the interest rate of a financial instrument or basket of financial instruments, an interest rate index serves as a benchmark used to calculate the interest rate charged on financial products, such as mortgages

Jj

Joint Account

an account (as in a bank) that more than one person can use, is a bank or brokerage account that is shared between two or more individuals, most likely to be used between relatives, couples or business partners who have a level of familiarity and trust for each other, as this type of account typically allows anyone named on the account to access funds within it

Joint Application

a joint application is one where you and another person like your spouse would apply for finance, sometimes when applying for car finance it may aid your application to make a joint application

Jumbo Loans

is a mortgage that exceeds the maximum amount that will be guaranteed by a government-sponsored also called Jumbo mortgage

Kk

Kiting

is the act of misrepresenting the value of a financial instrument for the purpose of extending credit obligations or increasing financial leverage

Ll

Lease

a contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent; also : the act of such conveyance or the term for which it is made, is a legal document outlining the terms under which one party agrees to rent property from another party

Lender

someone who makes funds available to another with the expectation that the funds will be repaid, plus any interest and/or fees, can be an individual, or a public or private group, provides funds for a variety of reasons, such as a mortgage, automobile loan or small business loan

Liabilities

is a company’s legal debt or obligation that arises during the course of business operations.

Lien

a legal claim that someone or something has on the property of another person until a debt has been paid back, the legal claim of one person upon the property of another person to secure the payment of a debt or the satisfaction of an obligation

Line of Credit

an arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan balance that the bank will permit the borrower to maintain, the borrower can draw down on the line of credit at any time, as long as he or she does not exceed the maximum set in the agreement

Loan Approval

means that the borrower meets the lender’s qualification requirements and also its underwriting requirements, formal authorization to get a loan (usually from a bank)

Loan Commitment

binding promise from a lender that a specified amount of loan or line of credit will be made available to the named borrower at a certain interest rate, during a certain period and, usually, for a certain purpose, a formal offer by a lender making explicit the terms under which it agrees to lend money to a borrower over a certain period of time

Loan Contract

is a contract between a borrower and a lender which regulates the mutual promises made by each party

Loan Fee

a fee assessed when credit is extended, a loan fee may be an annual fee on a credit card or a loan origination fee for a mortgage, it is separate from the interest

Loan Proceeds

net amount of funds that a lending institution disburses under terms of a loan, and which the borrower then owes, net amount disbursed by a lender to a borrower, under the terms of a loan agreement

Loan purpose

is a term in United States mortgage industry to show the underlying reason an applicant is seeking a loan

Loan term

period over which a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term

Loan to value

is all about how much mortgage you have in relation to how much your property is worth

Loan-to-Value Ratio

is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage

Local Check

is a check payable by, at, or through a bank in the same check processing region

Lock in the Rate

An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.

Mm

Maturity

termination of the period that an obligation has to run, the time when a note or bill of exchange becomes due

Mediation

the attempt to help parties in a disagreement to hear one another, to minimise the harm that can come from disagreement (e.g. hostility or ‘demonising’ of the other parties) to maximize any area of agreement, and to find a way of preventing the areas of disagreement from interfering with the process of seeking a compromise or mutually agreed outcome

Minimum Balance

is the minimum balance that a banking institution requires account holders to have in their accounts each day in order to waive maintenance fees, the smallest amount you need to have in an account to be able to keep it

Minimum Payment

is the lowest amount of money that you are required to pay on your credit card statement each month, smallest amount of a credit card bill that a credit card holder must pay each billing cycle

Monthly repayments

a repayment of part of a loan, usually monthly ⇒ my mortgage and loan repayments, ⇒ Their home will be at risk if they do not keep up the loan repayments

Mortgage

a legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years, a conveyance of or lien against property (as for securing a loan) that becomes void upon payment or performance according to stipulated terms

Mortgage Banker

a company, individual or institution that originates mortgages, is a bank that specializes in originating and/or servicing mortgage loans

Mortgage Broker

an intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages, a mortgage broker acts as a professional intermediary on a property buyer’s behalf, a mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval

Mortgage Broker Agreement

One who facilitates transactions between mortgage borrowers and lenders. Mortgage brokers are responsible for providing paper work between the parties and generally streamlining the process of making a mortgage. It is important to note that a mortgage broker neither originates nor provides funds for a loan. If the mortgage broker is unaffiliated with the lender, he/she may negotiate on behalf of the borrower for better terms. In any case, the mortgage broker receives a fee from the lender for locating the borrower and bringing him/her to the lender. See also: Mortgage banker.

Mortgage Insurance

is an insurance policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage

Mortgage Loan

a loan to finance the purchase of real estate, usually with specified payment periods and interest rates, the borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan, the mortgagee’s lien on the property expires when the mortgage is paid off in full

Mortgagee

a person or organization (such as a bank) that lends money to someone for buying property, is an entity that lends money to a borrower for the purpose of purchasing a piece of real property

Mortgagor

a person who borrows money for buying property : a person who takes out a mortgage in order to buy property, an individual or company who borrows money to purchase a piece of real property

Mutual Fund

a type of investment in which the money of many people is used to buy stock from many different companies, an investment company that issues shares continuously and is obligated to repurchase them from shareholders on demand

Oo

Official Check

also called cashier’s check, treasurer’s check, bank check, certified check, an official check is a check that the bank issues with guaranteed funds

Online Banking

a method of banking in which transactions are conducted electronically via the Internet, also known as internet banking, e-banking, or virtual banking, an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution’s website

Open-End Credit

is a pre-approved loan between a financial institution and borrower that may be used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due

Operating Subsidiary

is a business term frequently used within the United States in corporate profile descriptions

Outstanding Check

a check that has been written by a company (and deducted from the appropriate general ledger cash account) but it has not yet cleared the bank account on which it is drawn, a financial instrument that draws on the funds in an individual’s or business’ bank account but which has not yet been cashed or deposited by the payee

Overdraft

an amount of money that is spent by someone using a bank account that is more than the amount available in the account : an amount that is overdrawn from an account, an overdraft is an extension of credit from a lending institution when an account reaches zero

Overdraw

to draw checks on (a bank account) for more than the balance, to withdraw more money from (an account) than is available

Overlimit

refers to a cardholder account that has surpassed its credit limit with a transaction

Pp

Passbook

a small book or ledger for each customer in which a merchant keeps a record of goods sold on credit and the amounts owed and paid

Past Due Item

Any note or other time instrument of indebtedness that has not been paid on the due date.

Payday loan

monetary loan provided to borrowers that must be paid in full when the borrowers receive their next paycheck, is a type of short-term borrowing where an individual borrows a small amount at a very high rate of interest

Payday Loans

is a type of short-term borrowing where an individual borrows a small amount at a very high rate of interest, these loans are also called cash advance loans or check advance loans

Payee

a person or organization that receives money : a person or organization that is paid, a person to whom a check, money, etc., is payable

Paying Bank

a bank that is responsible for paying the amount of money on a cheque relating to one of its customer’s accounts, bank on which a check or draft is drawn; the bank which cashes it, also called accepting bank, drawee bank, or payor bank

Payment Due Date

date when payment should be received by the company, is the monthly date when at least a minimum payment is due to be paid on a credit card account, it may not fall on the same date each month

Payment Protection Insurance

is an insurance product that enables consumers to insure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt, it is not to be confused with income protection insurance, which is not specific to a debt but covers any income

Payment Schedule

timetable by which payments are made to a contractor or creditor

Payoff

complete repayment of a loan (principal plus interest), full discharge of an obligation, or the return from a deal, decision or investment., something valuable (such as money) that you give to someone for doing something and especially for doing something illegal or dishonest

Payor

a person, organization, etc., that pays or is responsible for paying something

Periodic Rate

is the interest rate charged on a loan or realized on an investment over a specific period of time, charge that is applied or recorded at regular intervals, such as a daily, weekly, or monthly, charges

Periodic Statement

billing summary listing account activity, mailed at regular intervals, usually monthly, periodic statement means “a statement setting forth information about an account (other than a time account or passbook savings account) that is provided to a consumer on a regular basis four or more times a year.”

Personal Identification Number

is a numerical code used in many electronic financial transactions, Personal identification numbers (PINs) are usually used in conjunction with usernames or other passwords

Points

a unit used in quoting prices (as of stocks, bonds, and commodities), a percentage of the face value of a loan often added as a placement fee or service charge, a percentage of the profits of a business venture (as a motion-picture production)

Preauthorized Electronic Fund Transfers

means an electronic fund transfer authorized in advance to recur at substantially regular intervals. A preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made.

Preauthorized Payment

arrangement (such as direct debit payment or standing order) under which a bank is authorized by a customer to debit his or her account for a regular bill’s amount or for loan installments

Prepayment

the satisfaction of a debt or installment payment before its official due date, it can be for the entire balance or for any upcoming payment that is paid in advance of the date for which the borrower is contractually obligated to pay it

Prepayment Clause

provision in some loan agreements under which a borrower may pay off (retire) a loan ahead of the schedule, without incurring prepayment penalty

Prepayment Penalty

is a clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed, is usually based on percentage of the remaining mortgage balance or a certain number of months worth of interest

Previous Balance

a method used by some card issuers where they base their finance charges on the amount owed at the end of the previous billing cycle

Price for risk

the risk of a decline in the value of a security or a portfolio. Price risk is the biggest risk faced by all investors. Although price risk specific to a stock can be minimized through diversification, market risk cannot be diversified away. Price risk, while unavoidable, can be mitigated through the use of hedging techniques.

Principal Balance

amount of loan remaining unpaid, not including interest and other charges, an outstanding balance of principal on a mortgage, which does not include interest or other charges

Private Mortgage Insurance

a risk-management product that protects lenders against loss if a borrower defaults

Processing Fee

money borrowers pay lenders for collecting needed information to set up their loans

Promissory Note

a written promise to pay at a fixed or determinable future time a sum of money to a specified individual or to bearer, business: a written promise to pay an amount of money before a particular date, a legal instrument (more particularly, a financial instrument) in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms

Purchase Mortgage Loan

is a home loan used to purchase a piece of property, whether it be a principal residence, a second home, or an investment property.

R

Reconciliation

The action of making financial accounts consistent

Redlining

the unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city neighborhoods to borrow money, gain approval for a mortgage, take out insurance or gain access to other financial services because of a history of high default rates

Refinance

when a business or person revises a payment schedule for repaying debt, to increase or change the financing of, as by selling stock or obtaining additional credit

Refinancing

paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral.refers to the replacement of an existing debt obligation with another debt obligation under different terms

Refund

to return (money) in restitution, repayment, or balancing of accounts

Release of Lien

agreement between a lender and a borrower under which the lender (lien holder) releases the mortgaged asset or property, although the debt obligation remains in force

Renewal

the act of extending the period of time when something is effective or valid, the act of renewing something

Repayment schedule

a document detailing the specific terms of a borrower’s loan, such as monthly payment, interest rate, due dates etc.

Rescind

to end (a law, contract, agreement, etc.) officially : to say officially that (something) is no longer valid

Residual Interest

a charge for borrowing money that accrues on a credit card account between the date the bill is issued and the date the cardholder pays the bill, is the amount of interest that accrues between when a credit card bill is sent, and when payment is received

Return Item

a negotiable instrument returned unpaid to the originator bank, a drawee bank returns unpaid items to the originator bank for correcting errors and irregularities

Reverse Mortgage

a type of mortgage in which a homeowner can borrow money against the value of his or her home, no repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan

Revolving Credit

is a line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed, is when borrowers have access to a certain amount of money that doesn’t require a final date to be paid off

Right of Offset

the legal right of a bank to seize deposited funds to cover a loan that is in default, engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc.

Right of Rescission

right afforded in certain jurisdiction whereby a borrower can cancel a mortgage loan (typically within 3 days of signing) upon changing his or her mind regarding purchase of the property

Ss

Safekeeping

is the storage of assets or other items of value in a protected area, the act of keeping something safe

Second charge

asecond charge mortgage allows you to use any equity you have in your home as security against another loan, it means you will essentially have two mortgages on your home

Secondary Mortgage Loan

is a loan you take out using your house as collateral while you still have another loan secured by your house

Secured loan

loan agreement under which a borrower pledges a specific asset or property which the lender can seize in case of default, a loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender, loans that are protected by an asset or collateral of some sort

Service Charge

a fee charged for a particular service often in addition to a standard or basic fee —called also service fee, is a type of fee charged to cover services related to the primary product or service being purchased

Settlement

a formal agreement or decision that ends an argument or dispute, an amount of money that someone receives as part of such an agreement

Settlement Agent

the party involved in completing a transaction between a buyer and seller, professional who functions chiefly for the buyer by conveying the selling interest from the buyer to the seller and ensuring the orderly transfer of the legal title from the seller to the buyer through the closing process

Settlement Attorney

oversee all closing services needed to complete a real estate sale or purchase, they are responsible for closing the transaction in accordance with the contract of sale, the lender’s loan closing instructions and state and federal laws, is a fiduciary who is a neutral third party; despite buyers’ and sellers’ impressions, the settlement attorney does not represent either of the parties to the transaction

Settlement Statement

a statement that summarizes all the fees and charges that both the homebuyer and seller face during the settlement process of a housing transaction

Shared ownership

takes one property, more than one owner, and blends them to maximize profit and tax deductions

Signature Card

card that a customer signs when opening an account at a financial institution, a card that must be signed by an individual who is opening an account at a bank or other similar institution  

Stale-Dated Check

check presented at the paying bank after a certain period (typically six months) of its payment date, check is not an invalid check, but it may be deemed an ‘irregular’ bill of exchange

Stop Payment

is a request made to a financial institution to cancel a check or payment that has not been processed yet, a stop payment order is issued by the account holder, and can only be enacted if the check or payment has not already been processed by the recipient

Student Loan

a loan offered to students which is used to pay off education-related expenses, such as college tuition, room and board at the university, or textbooks, money owed on a loan taken out to pay for educational expenses

Survey

to ask (many people) a question or a series of questions in order to gather information about what most people do or think about something, to examine as to condition, situation, or value

Tt

Term

conditions with regard to payment, price, charge, rates, wages, etc.

Time Deposit

a deposit that can be withdrawn by the depositor only after giving advance notice or after an agreed period of time has elapsed, a time deposit is an interest-bearing bank deposit that has a specified date of maturity

Total amount repayable

The total amount of money to be repaid on a loan; it includes interest, charges, fees, etc

Transfer Tax or Charge

Any kind of tax that is levied on the transfer of official documents or other property. Transfer tax is paid by the seller of the property. Gift and estate taxes are both transfer taxes.

Trust Account

a savings account deposited in the name of a trustee who controls it during his lifetime, after which the balance is payable to a pre nominated beneficiary, an account in which a bank or trust company (acting as an authorized custodian) holds funds for specific purposes such as to pay property taxes and/or insurance premiums associated with a mortgaged property

Truth in Lending Disclosure Statement

provides information about the costs of your credit, will help you figure out exactly what to expect in the way of immediate and long-term loan costs

Typical APR

Typical APR is the rate which is offered to at least two-thirds of the loan applicants that get approved

Uu

Uncollected Funds

the amount of a bank deposit that comes from checks that have yet to be cleared by the bank from which the checks are drawn, deposits that need to be reconciled; that is, the bank from which a check is drawn must acknowledge that the checking account has the funds to cover the check. Once the check “clears”, the depositor can have access to the deposited funds. Until then, the funds are referred to as uncollected funds

Underwriting

to give money to support (something, such as a new business) and agree to be responsible for any losses if it fails, to write one’s name at the end of (a policy), thereby becoming liable in case of certain losses specified in the policy

Unregulated

without regulation or discipline

Unsecured loan

is a loan that is issued and supported only by the borrower’s creditworthiness, rather than by a type of collateral, is one that is obtained without the use of property as collateral for the loan, is debt that does not have any collateral attached

Up Front Costs

expenses that are charged at the beginning of a contract, project or business activity

Usury

the lending of money with an interest charge for its use, especially the lending of money at exorbitant interest rates, the lending or practice of lending money at an exorbitant interest

Usury Rates

a rate of interest that is usually considerably above current market rates. Usury rates are often charged by unsecured lenders on loans

Vv

Variable Rate

any interest rate or dividend that changes on a periodic basis

Ww

Wire Transfer

a wire transfer is an electronic transfer of funds across a network administered by hundreds of banks around the world, an order transmitted by telephone, telegraph, or electronically from one bank to another to pay or credit money to a payee designated by a payer

Yy

Yield Spread Premium

a form of compensation that a mortgage broker, acting as the intermediary, receives from the original lender for selling an interest rate to a borrower that is above the lender’s par rate for which the borrower qualifies