Adjustable Rate Mortgage (ARM)- a mortgage with a fluctuating interest rate based on the changes in a particular index.
Adjusted Balance- a method for calculating interest, used by some credit card issuers. It involves subtracting all payments made during the month, and then adding the calculated finance charges.
Adjusted Gross Income (AGI)- The actual amount of an individual’s income that is taxable. It consists of an individual’s gross income from reputable taxable sources; subtract certain items like payments to a Keogh plan, 401K, or a deductible Individual Retirement Account. Thus, AGI subtracted by deductions and personal exemptions gives you your taxable income.
Amortization- The steady decrease in debt by way of incremental payments for a specified period of time, that is substantial enough to cover interest and principal.
Annual Fee- a yearly fee charged for the use of a credit card. Generally, it is billed to your statement directly.
Annual Percentage Rate (APR)- The annual cost of either a loan or credit. This includes interest and fees, represented as a percentage rate.
Annuity- A scheduled time period of periodic payments made by an insurance company.
Appraisal- An expressed opinion in written form made by a professional of the market value of property.
Appreciation- The rise in value of an investment over an extended period of time.
Asked Price- The lowest amount possible in which an investor is able and willing to sell a security or commodity.
Assessed Value- An appraisal of the value of an asset by a public tax assessor to determine tax.
ATM- An automatic teller machine.
Authorized User- A person who has received permission to use a credit card account.
Average Daily Balance- A method in which to calculate interest by credit card issuers. By adding each day’s balance and dividing the sum by the number of days within the billing period, the average daily balance is determined.
Balance Sheet- a list comprising of liabilities, assets, and net worth as of a specific date.
Balance Transfer- Taking an unpaid credit card debt and moving from one creditor to another.
Balance Transfer Fee- a fee that is given as a result of transferring an outstanding balance from one creditor to another creditor.
Balanced Funds- Funds that are considered mutual that invest in various stocks and bonds. Usually appropriate for retirees or Wall Street stock market investors due to the low risk.
Bank- A commercial institution that is licensed as a receiver of deposits, primarily banks are tasked with making and receiving payment. In addition, supplying short-term loans to private individuals.
Bankruptcy- a proceeding held in a court of law in which a debtor receives relief from debt liability, wholly or partially dependent on the chapter of bankruptcy filed.
Beneficiary- One who is selected to receive assets from a legal will, trust, insurance policy, or retirement plan.
Bequeath- To grant property to those named, as heirs through a legal will.
Bid Price- The exact amount that a potential buyer is looking to purchase a type of commodity or security.
Billing Cycle- The amount of days from the last credit card statement date to the current credit card statement date.
Billing Statement- The bill that is sent monthly by a creditor. Within the bill, a summary of activity on an individual’s account, that’s balance, payments, purchases, credits, and finance charges.
Biweekly Mortgage- A mortgage that includes the borrowers paying half of the monthly payment biweekly (every two weeks). This equals 13 annual mortgage payments and an accelerated amortization.
Bond- a certification of debt given by a company or the government. In most cases, bonds pay a specific interest rate, paying back the initial investment after a decided period of time.
Bond Fund- A mutual fund that produces income, consisting of corporate, municipal, or government bonds.
Broker- An individual and or a firm that issues a fee or a commission to serve as an intermediary between both buyers and sellers of properties and security.
Bull Market- The phrase used to describe the stock market when the prices of securities are rising.
Call- An option that allows the owner the right to buy a specified amount of a security or commodity at an exact price during an exact time. It is considered the opposite of a put.
Call Price- The price that is possible for a callable security to be claimed by the issuer.
Callable Bond- A security that is allowed to be claimed by the issuer before the point of maturity. The term refers to bonds or preferred stocks.
Cap- The absolute maximum amount in which an interest rate can increase on an adjustable-rate mortgage. The maximum amount of interest that will ultimately be paid on a bond issue.
Capital Gain- The profit gained from the sale of an asset or a security.
Capital Growth- An overall rise in the market price or of the value of an asset.
Capital Loss- The loss as a result of sale of an asset or security.
Capital Stock- The shares that represent the ownership of interest with a business. This includes common and preferred stock.
Capitalized Cost- The value in which an asset is used to calculate depreciation.
Card Holder Agreement- The written statement of the particulars regarding a credit card account, as per Federal Reserve regulations. Within the statement must include: annual percentage rate, monthly minimum payment formula, annual fee if there is one, as well as the cardholder’s rights regarding billing disputes.
Cash Advance Fee- A fee issued by a bank for the use of credit cards to obtain cash. This charge by banks can be in terms of a flat per-transaction, or by a percentage of the amount of the cash advance.
Cash Flow- The mean difference of what you earn and your overall expenses.
Cash Value Life Insurance- A type of life insurance coverage that includes a tax-deferred savings component, and also provides a certain death benefit.
Certificate of Deposit- An investment that is insured by the FDIC that guarantees an exact rate of interest for a specified period of time.
Certificate of Title- A form of legalized documentation that includes a property’s current owner.
Certified Financial Planner (CFP)- Someone who is certified by the Certified Financial Planner Board of Standards to lend advice in regard to financial matters.
Certified Public Accountant (CPA)- Designation from the American Institute of Certified Public Accountants given to accountants who pass a rigorous exam and meet the standard regarding related work experience requirements.
Charge Card- A type of card that must have a full payment of the charge by a certain due date. Contrary to credit cards, charge cards do not let you carry a balance, and no interest is accumulated on an account. For example; American Express and Diner’s Club.
Charge Off- Occurs when a creditor decides to transfer a delinquent account to a category referred to as “bad debt” or additionally, “loss” and moves the account to a collection agency.
Check Card- a type of plastic card that is used to automatically withdraw funds from your checking account as opposed to a check, for purchases or cash.
Classic Card- A type of brand name for the standardized card issued by VISA
Closing- finalizing the sale of property through a transfer of title from the initial seller to the buyer. This is also referred to as settlement.
Closing Costs- The cost attached to transferring ownership of a property for both the buyers and the sellers. Usually, the costs include a loan origination fee, advance on taxes deposited into an escrow account, attorney’s fee, title insurance fees, recordation and transfer taxes, and other fees. Also referred to as settlement costs.
Co-Branded Cards- An affinity card that is issued through a partnership between a retail company and a bank.
Collateral- An assurance involving one’s underlying security, mortgage, and asset pledged or entrusted for the use of securitization or borrowing activities.
Collection Agency- A company that is hired by a creditor in order to collect a certain debt which has yet to be paid. In most cases, creditors will only seek the service of collection agencies if their efforts in collecting the debt themselves are a failure. The Fair Debt Collection Practices Act regulates collection agencies.
Collision Insurance- A type of auto insurance that is used to cover the cost of damage to your vehicle, as a direct result of a collision with another vehicle or object.
Commission- The payment to a broker for acting as an agent on behalf of the purchase or sale of securities and properties.
Common Stock- Stock that does not pay dividends at a projected rate with the exception of preferred stock.
Community Property- Assets or, in some cases a method of ownership. It essentially means that each spouse owns a 50 percent interest in an account. Upon the death of one of the spouses, the surviving spouse claims his/her ownership of exactly one-half of the asset. The other half passes in accordance to a legal will or to law. Laws and interpretations vary by state.
Compound Interest- The payment of interest. This includes principal investment as well as interest calculated in previous periods.
Comprehensive Insurance- A version of auto insurance that covers damage to your vehicle, covering incidents other than collision. For example: flood, fire, hail, theft, or vandalism.
Conforming Loan- What is considered a conventional mortgage that conforms to the loan amounts and the mortgage guidelines authorized by the Federal National Mortgage Association (Fannie Mae), and/or by the The Federal Home Loan Mortgage
Consolidation Loan- A singular loan that can be obtained in order to pay off multiple loans. Some opt for a consolidated loan in hopes for a lower monthly payment, though it does usually require a longer repayment period—also referred to as debt consolidation.
Consumer- A person who purchases goods or services.
Consumer Credit Counseling- Form of credit assistance intended for financially challenged consumers who are seeking aid to help manage their finances. Also referred to as debt relief.
Contingency- A pending condition that must be fulfilled before a contract goes into effect as a legally. Contingencies are added by both buyers and sellers.
Contract- An agreement of either a written or oral nature that stipulates an action or lack of an action.
Conventional Mortgage- A load that is permitted to be privately insured, but is not insured or guaranteed by the government in any way.
Corporate Bond- An issued bond from a particular corporation.
Co-Signer- A third party who agrees to sign a loan application along with the primary applicant and thus becomes equally liable for payment of the balance if the primary applicant fails to do so.
Credit- A agreement by contract in which a borrower receives a valuable entity now and agrees to reimburse the lender at a later date.
Credit Bureau- An establishment that collects and sells information pertaining to how people handle their credit. Equifax, Experian, and TransUnion are among the three major credit bureaus.
Credit Card- A card typically made of plastic that comes with a coded magnetic strip that when utilized, accesses its owner to a revolving line of credit. The size and interest rate regarding the line of credit is dependent on the borrower’s credit worthiness. It is a card that allows making purchases on items without any cash on hand, delaying the payment for typically about 25 days.
Credit History- Recorded and kept within a credit bureau, contains details regarding a person’s line of credit and their success or failure in paying off past debt. Lenders utilize credit history to determine where or not a potential borrower is good or bad risk.
Credit Insurance- An insurance policy that fulfills debt payments in the event that the borrower loses their job, die, or becomes disabled.
Credit Limit- The limit on the amount of credit granted to a borrower.
Credit Report- A report detailing a person’s credit history via a reputable credit bureau. It reveals an individuals ability to manage their debts and make payments on time. The report is produced upon request for a specific need for said information.
Credit Score- A score based on statistics in the form of a numeric score. It is based on multiple details regarding an individual’s credit history, which measures worth of credit.
Creditor- An entity that you either borrow money from or you owe money to.
Creditworthiness- The ability to repay debts, past and presently.
Daily Periodic Rate- The interest rate variable used in order to determine the daily interest charges. The outcome equals the annual percentage rate, divided by the 365 days in the year.
Debit Card- A type of bankcard that is granted direct access to a cardholder’s account. In most cases it is for a checking or savings account. The card functions like a check, as the money is withdrawn from the existing balance from the account.
Debt- An amount of funds owed from person or firm to another person or firm.
Debt Service- The total of monthly payments required for either credit cards, home equity loans, installment loans, home equity loans, and other debts. This excludes payments on the loan applied for.
Debtor- An entity or a person that currently owes a sum of money.
Debt-to-Income Ratio- A calculated measurement of creditworthiness that renders your debts in the form of a percentage of income. It is then calculated by dividing the total of your long-term debt payments by your gross income.
Deductible- The amount of loss or the expenses for which the party that is insured is responsible before the claim is submitted, and the insurance company begins payments—covered under an insurance policy.
Deed- a legalized document rendering title to real property.
Deed in Lieu (of Foreclosure)- occurs when a homeowner is unable to make the monthly mortgage payments and cannot find an adequate buyer for the house. As a solution, the lender can accept ownership of the property in place of the money which is owned on the mortgage.
Default- A recording of a missed payment, according to the terms of agreement.
Defendant- A person that is charged in a legal action.
Deferred Annuity- An annuity that serves to delay payments until holder decides the appropriate point in which to receive them.
Deflation- A decrease in the overall price of goods as well as services.
Depreciation- A decrease in an asset’s value over a span of time.
Derivatives- Financial tools with returns that act in response to some sort of underlying asset or index.
Digital Certificate- A type of electronic document, which serves to verify the identity of the owner of a public key.
Disability Insurance- Insurance that substitutes your income if you are ill or injured, and unable to work as a result.
Discharge of Debts- a bankruptcy court’s deletion of the debts in which a person or business has filed for a form of bankruptcy.
Dischargeable Debts- Debts that have the potential to be erased via bankruptcy. In most cases, debts incurred prior to declaring bankruptcy can be discharged. This includes back rent, credit card bills, as well as medical bills. Compare to non-dischargeable debts.
Discount- The degree in which the price of an asset is lower than its initial value.
Discount Bond- A bond that is sold for less than the face value.
Diversification- The expansion of investment dollars throughout a variety of different assets or securities in a comprised portfolio for the purpose of reducing the potential risk of an asset’s performance.
Dividends- Payment that is made by a company to its stockholders that is generally a portion of the overall profits.
Dollar Cost Averaging- To invest a fixed sum at regular intervals, regardless of the share price, for the purpose of reducing timing risk.
Dow Jones Industrial Average- Widely renowned stock composed of about 30 blue-chip status stocks. The value of this index, which excludes dividends, is calculated daily.
Down Payment- A portion of the purchase price that is typically paid immediately upon purchase, usually in the form of cash or trade-in value.
Earnest Money- A deposit that is paid up front directly as part of a purchase price. It serves to demonstrate good faith on the part of the buyer.
Electronic Fund Transfer (EFT) Systems- An assortment of systems and technologies transferring funds through an electric platform as opposed to by a written check.
Endorsement- A provision that is supplemented to an insurance policy in order to add to or alter the existing coverage. This is also sometimes referred to as a rider.
Equity- Ownership interest in the form of an asset. In addition, a security which is determined based on an ownership interest.
Escrow- A process in which a separate third party withholds documents, money, or other property until conditions which have been predetermined are fulfilled.
Estate- All the property that an individual owns at the time of death.
Estate Planning- To plan to make sure your assets are passed to the people you intended them for in a concise and orderly manner.
Estate Taxes- Taxes levied by the federal and the state governments on the transfer of a person’s assets after time of death.
Executor- An individual listed in the will that acts as an overseer to the distribution of an estate, as directed in the aforementioned will.
Federal Deposit Insurance Coporation- An agency created by the federal government in order to shield depositors against losses that may arise as a result of the financial failure of a bank.
Federal Insurance Contributions Act (FICA)- A law that states that employers may withhold Social Security and Medicare taxes from wages.
Federal Reserve System- The center of the nation’s banking system. Designed by Congress in order to help provide the U.S. with a secure monetary and financial system.
FHA Mortgage- A type of mortgage on which the lender is granted insurance against a loss by the Federal Housing Administration. The borrower is responsible for paying the mortgage insurance premium.
Finance Charge- The overall cost of using credit—includes interest costs, among other fees.
Finance Company- A business that produces consumer based loans. Usually interest rates via a finance company will be higher than those charged by creditors, allowing more flexibility for those with issues with their credit.
Financial Planner- A sort of financial aid or adviser who has a good deal of knowledge of all areas of personal finance.
First Mortgage- The first attempt claim against a real property if the borrower opts to default on the loan.
Fixed Annuity- A fixed payment that is guaranteed throughout the duration of the annuity.
Fixed Rate Mortgage- A type of mortgage in which the interest rate is highlighted in the loan contract. It must remain unchanged throughout the duration of the mortgage loan, additionally.
Flexible Spending Account- A benefit that is employer-sponsored, allows employees to have dollars that are pre-taxed withheld from their salaries to pay for medical expenses that were not given to the appropriate party.
Float- The option in which the borrower allows the rate and points to vary with the change in market conditions, as opposed to being locked in those which are showing success at that specific time.
Forbearance- To voluntarily decline to do something, such as following executing legal right.
Foreclosure- The legal process wherein the mortgage lender sells the real property in the event of a default. The charges are delivered to the mortgage debt, as a result, the owner’s right of ownership is terminated.
401(k) Plan- A retirement savings plan that is employer-sponsored, tax-deferred, retirement, which is funded by employees with contributions that deducted from pre-tax income.
Fraud- A practice of dishonesty or illegality.
Full Faith and Credit- An unconditional agreement to pay interest as well as principal on debt. In most cases it is issued or guaranteed by the U.S. Treasury.
Garnishment- A decision within a legal proceeding in which money or property that is owed to you is attached to the payment of the initial debt. It is also referred to as wage garnishment.
Gold Card- A form of credit card that offers a larger line of credit than a standard card—typically around $5,000 and up. The requirements on income are usually raised, usually a $35,000 minimum. The issuers also tend to provide perks or additional incentives to card users.
Good Faith Estimate- A preliminary estimation of the fees attached to closing a loan that is given to you three days of submitting a loan application.
Government Bond- A U.S. government issued bond.
Grace Period- A period of time when there can be no accumulating interest or fees.
Graduated Payment Mortgage (GPM)- A type of mortgage that makes it possible to grant a lower initial payment that increases over a span of time—eventually leveling off.
Gross Income- Income, salary and wages before taxes are deducted.
Growth Fund- A fund of mutual benefit that invests mainly in stocks for capital appreciation, as opposed to income at the present time.
Growth Stock- The stock of a company that holds a record of drastic growth—relative to its industry.
Guarantee- A promise from one party to another saying that the aforementioned party will pay a debt or perform an obligation if the person with the majority of liability fails to pay up or perform the task, as stipulated or required.
Guardian- The person who is legally chosen as being completely responsible for the wellbeing of a minor child or the personal property of another person.
Hazard Insurance- A type of insurance that is a protection for people against the possibility of property damages caused by fire or a severe storm.
Heir- A person who is a designated beneficiary as per directed in a legal will.
Home Equity Loan- A completely funded type of loan, which is obtained for multiple purposes. It is secured by an additional mortgage and dependent on the equity of your home.
Home Inspection- A professional inspection conducted by a specialist to review the condition of the structure, electrical, plumbing, as well as the mechanical systems of a home being that is pending a purchase.
Homeowner’s Insurance- An insurance policy that is intended to protect a homeowner against damages to property. Additionally, it covers liability protection for lawsuits from people who injure themselves while on the property.
Household Income- The total amount of income from all the members of one household. This is typically a measure often used by creditors in order to evaluate applications for joint credit.
Immediate Payment Annuity- A one-payment annuity—payments begin right away.
Impound Account- A portion of the borrower’s monthly mortgage payment that is kept by the lender in order to cover the expenses for property taxes, hazard insurance, mortgage insurance, rent, as well as other things that become due in time. This is also referred to as an escrow account.
Income Fund- A mutual fund that funnels current income, as opposed to capital growth.
Index- A published and market based scale used to set up a lending rate.
Index Fund- A kind of mutual fund that is intended to mirror a broad-based index, much like the S&P 500 stock index. These funds generally have low cost management fees due to their lack of activeness.
Indexed Rate- T=he sum of the published index in an adjustable rate mortgage, added by the margin.
Individual Retirement Account (IRA)- An investment account that is tax-deferred that an employed person establishes to ensure funds for retirement.
Individual Retirement Account Rollover-The transferring of qualified retirement funds from one account to another for the purpose of avoiding taxability and penalty. The rollover must happen within sixty days into an IRA-approved retirement account.
Inflation- An increase in the prices of certain goods and services, usually in the form of an annual percentage increase in the Consumer Price Index, as determined by the Department of Labor.
Installment Loan/Installment Credit- An account wherein the debt is divided into amounts to be released at specific intervals set by the terms of the loan.
Interest- The cost, or the price of borrowing a sum of money. The earnings of invested money.
International Fund- A type of mutual fund that is invested in foreign securities.
Interstate- To die without having a legal will conscribed.
Introductory Rate- The low rate that is charged by the lender for a standard period in order to encourage
Investment- An asset or an item of some value that is purchased to produce a profit at some point in the future.
Investor- An individual that makes an investment.
Joint Credit- An account that is owned by two or more people wherein all parties are held responsible for paying off the debt.
Judgement- A court order that requires a person to do something, for example, paying a debt.
Kappa- The ratio of the dollar shift in the price of an option in relation to a one percent change in the projected price volatility.
Late Payment Fee- A fee issued to a customer whose monthly payment has not yet been received as of the due date or the decided deadline for payment, provided by the billing statement.
Lease- A contract that permits a person to use or occupy a property, like an apartment or car. A lease lasts for a set amount of time, in which you must make regular payments.
Liability- A financial responsibility or obligation, or amount you will owe.
Liability Insurance- Insurance for the purpose of protecting you against injuries you cause to others, or the damage to their property.
Lien- A secured claim to a piece of property as payment or fulfillment of a debt or obligation.
Life Expectancy- The age to which roughly half of the people in a specific age group are expected to live.
Liquidity- The determining factor of how simple it will be to convert an asset to cash without the loss of the principal.
Living Will- A document that highlights your medical decisions if you become in a state where you are unable to speak for yourself as a result of being incapacitated somehow.
Load- The commission of sales charged when you choose to either buy or sell shares from a mutual fund.
Load Fund- A mutual fund wherein a sales charge is carried.
Loan- Situation where a lender grants money or property to a borrower, with some form of agreement that the borrower will return the property or repay the borrowed money, plus interest, and a set date in the future.
Loan Commitment- A written agreement that exists with the lender and borrower for the purpose of loaning money for a future date, based on predetermined terms and conditions.
Loan-to-Value Ratio (LTV)- A ratio represented as a percentage, brought on by dividing the load amount by the sales price or the appraised estimated value, also represented as a percentage.
Lock In- A commitment that is obtained from a lender guaranteeing a set interest rate or feature for a set period of time. It also offers protection in the event of interest rates rising between the time you apply for a loan, acquire the loan approval, and then eventually close the loan.
Long-Term Care Insurance- Insurance that offers an amount of coverage for live-in nursing, and home health care for people with severe medical conditions.
Margin- In an adjustable rate mortgage, the amount that has been added to the interest rate index, to determine the new indexed interest rate.
Market Timing- Taking money in and out of investment markets in attempt to take advantage of increasing prices and dodge downturns.
Market Value- The price that buyers are looking to buy and in contrast, that sellers are hoping to sell.
Maturity- The set date in which a debt is due for payment.
Medicaid- A program funded by the government that provides health care assistance for the poor.
Medicare- A government program that provides necessary health care for the elderly and disabled.
Minimum Payment- The minimum amount, typically two or three percent of the outstanding balance. A cardholder is permitted to keep a credit card account from defaulting.
Money Market Account- A demand account that is federally insured and available through banks, credit unions, and savings as well as loan associations.
Money Market Mutual Fund- A type of mutual fund that invests in safe and short-term securities. These funds are seamlessly converted into cash, as well as designed to maintain a constant value of one dollar per share.
Monthly Periodic Rate- The interest rate scale used to calculate the interest charges each month. The sum is equal to the annual percentage rate, and then divided by twelve.
Mortgage- A loan that is secured by real estate wherein the borrowers grants the lender a lien on the property as a form of security until the loan is settled and repaid in full.
Mortgage Insurance- Insurance that is intended to protect a lender against loss if the mortgage borrower defaults. Also referred to as private mortgage insurance.
Municipal Bond- A bond that is issued by a state or a political institution, for example, a county, city, village, or town.
Mutual Fund- A type of bond that is a pool of money managed by an investment company, which raises a sum of money from shareholders and then invests them in stocks, bonds, options, money market securities, or commodities. Offers diversification as well as professional management, the investment company charges a disclosed fee.
NASDAQ- The National Association of Securities Dealers Automated Quotation System. It is often known as the over-the-counter market. It is computer based securities exchange that does not retain a physical location in which to trade. Transactions are completed over the telephone as well as computer networks.
Negative Amortization- A rise in a mortgage loan balance that occurs once the monthly payment is too small to cover the principal and the interest that is due.
Negotiable Instrument- A written form or document that details an unconditional agreement to pay a specified sum of money upon the request of its owner
Net Worth- The distinction of a person’s assets and liabilities.
No Load Fund- A mutual fund that has no sales commission attached to it.
Non-Dischargeable Debts- Debts that can’t be removed via bankruptcy.
Non-Profit Corporation- A business entity that is created for civil, social, or philanthropic purposes for which the generation of profit is not included in its functionality. Non-profits are held to a different standard in regard to taxes.
Open-End Credit- A line of credit that can be established for reuse. This includes credit cards, overdraft credit accounts, and home equity lines.
Origination Fee- A loan processing fee that is paid to the lender as a percentage of the initial loan. One percent equals roughly one point.
Outsource- To have a certain service done or a function completed by someone outside of the company.
Overdraft Checking- A checking account equip with a line of credit that enables the borrower to write checks or withdraw funds for more than the actual account balance.
Over-the-Limit Fee- A type of fee that is charged for exceeding the credit limit on a credit card.
Penalty Rate- A few percentage points higher than a credit card’s present annual percentage rate. This goes into effect after a set number of late payments.
Periodic Rate- The interest rates detailed in connection to a particular amount of time. Monthly periodic rate equals the cost of credit per month; the daily periodic rate equals the cost of credit per day.
Personal Identification Number (PIN)- A code that is used in order to access bank or credit card accounts at ATMs or POS locations.
Personal Loan- A type of loan that is secured by property other than real estate, or is unsecured.
PITI- An abbreviated version of Principal, Interest, Taxes, and Insurance, which make up the components of a monthly mortgage payment.
Platinum Card- A credit card that comes with a higher spending limit and more benefits and perks than a gold card.
Plaintiff- The party who enacts a suit in a court.
Points- Charges that are paid to the lender, typically at the closing of agreement. One point equals one percent of the mortgage face amount.
Policyholder-A policyholder is someone who pays a premium to an insurance company in exchange for the protection represented in an insurance policy.
Portfolio- The securities or the investments owned by a particular individual.
Power of Attorney- A legalized document that permits someone to select an attorney to conduct personal as well as financial business, even in situations of legal incompetence. The agreement expires upon the death of the giver.
Pre-Approval- The process used to assess a potential borrower’s ability to pay back a loan granted. It also determines the amount of money a potential homebuyer can borrow before an actual application can be made.
Preferred Stock- A type of stock that usually pays off at a set rate, then is given preference pertaining to the payment of dividends and the releasing of corporate assets if liquidation should occur. Usually no voting rights with preferred stock.
Premium- A fee you must pay for insurance, typically scheduled expenses paid at fixed intervals.
Prepayment Penalty- A charge that is imposed by a lender in the event of the borrower paying off a loan early. The charge is typically represented as a percent of the initial loan balance once the prepayment is made.
Prequalification- A process that used to assess a potential borrower’s ability to pay back a loan. It is determined by how much money a potential purchaser of a home can borrow before the application can be made.
Previous Balance- A method for interest calculation which is used by some credit card issuers where finance charges are determined by the amount that is owned by the end of the former billing cycle.
Prime Rate- The interest rate banks utilize to price loans to their best customers.
Principal- The initial or remaining amount of money invested or lent, this does not include profits or interest earned or due on that money.
Probate- The process of distributing the deceased party’s estate.
Profit Sharing Plan- A compensation plan that is funded by employer contributions. It is typically based on a share of the company’s overall profits.
Public Offering- The selling of stock by a particular corporation to the public.
Put- An option that grants its owner the permission to see an amount of security or commodity at a specific price within a specified timeframe. It is considered the opposite of a call.
Qualified Retirement Plan- A retirement plan that is in accordance with certain IRS regulations and additionally is eligible for a tax deferment, in certain cases is tax deductible.
Qualifying Ratios- The ratio of your fixed monthly expenses to your gross monthly income. It is used to determine how much you can afford to borrow.
Real Property- Another term for real estate. It includes property and things permanently attached to the property, like trees, buildings, and stationary mobile homes. Anything that is not considered real property is defined as personal property.
Real Property- alternate term for real estate. Includes land and things permanently attached to the land, like trees, buildings, and mobile homes. Whatever is not real property is defined as personal property.
Rebate Card- A type of credit card that allows the customer to accumulate cash, merchandise, or services based on charges.
Refinancing- Paying off one loan with the remaining proceeds from a separate loan.
Replacement Cost Coverage- Homeowner’s insurance that covers the cost to replace or to repair the home that is insured or the possessions within the home.
Reverse Mortgage- An equity loan that permits a homeowner to get tax-free payments monthly up to the limit of credit—based on equity in the home.
Revolving Line of Credit- An agreement made to lend a certain amount of money to a borrower, and also to allow that amount to be borrowed again once it has been repaid. In most cases, credit cards offer revolving credit.
Rider- A provision that is added to an insurance policy in order to amend or change the original coverage plan.
Risk- The amount of uncertainty pertaining to the rate of return on the principal value of an investment.
Roth IRA- A retirement account that is tax deferred. Roth IRA contributions are not tax deductible, but there is no tax on withdrawals provided the taxpayer is 59 and a half, and the account has been opened for five years or so.
Second Mortgage- The second in priority claim against a property should the borrower default on a loan. It is considered to be riskier than traditional lending because the lender who holds the second mortgage receives payment only after the lender with the first mortgage is paid.
Secured Card- A type of credit card that a cardholder secures with a savings deposit to make payment of the outstanding balance if in the event the cardholder defaults on payments. Those who are new to credit, or those trying to rebuild their “bad credit” generally use it.
Secured Debt- A debt in which collateral has been agreed by the borrower.
Securities- Stocks, bonds, and other kinds of investments that represent equity ownerships, or in some cases a obligation of debt to an organization.
Securities and Exchange Commission (SEC)- The federal government agency that is responsible for enforcing federal securities laws.
Servicing- Term that is used to describe the administration of mortgage loans between the time of loan disbursement and the time the loan is fully paid off.
SIMPLE IRA- A Savings Incentive Match Plan for Employees IRA, which is a tax-deferred retirement plan that can be used by a sole proprietor, or given by a small business that doesn’t aid to another form of retirement plan.
Simplified Employee Pension (SEP)- A type of pension that allows you to make contributions to your own personal retirement plan. Also used if you’re self-employed, as well as for your own employees’ plan.
Social Security- A U.S. government directed program, which provides economic assistance to the unemployed, aged, and disabled. It is funded by the taxation of workers and employers. Retirement insurance, disability insurance, supplemental security are the programs under social security.
Spread- The difference between the bidding price and the requested price of a security or a commodity.
Standard Card- The standard credit card that is offered by issuers.
Standard Deduction- The set amount you are able to deduct from your taxable income if you do not itemize your deductions. Around 70% of all individual
Stock- An equity security that shows ownership in a corporation. Holders of stock may have some right, which includes the right to claim dividends and also the right to elect members to the board of directors of the company or corporation.
Stock Certificate- A form or document that provides some kind of physical evidence of stock ownership.
Stock Dividend- A dividend that is paid in the form of stock as opposed to cash. The dividend can also be additional shares of the issuing company.
Stock Fund- A mutual fund that invests mainly in stocks.
Stock Split- A separation of the outstanding shares of a company or corporation into a bigger number of shares. The quantity of shares ultimately increases, but the overall value remains the same.
Strike Price- Where the stated price the holder has the choice of either buying or selling upon exercise of the option in an open contract.
Surrender Value- The total amount of money a policyholder would get after they choose to cancel a life insurance policy.
Tax Deferred- An investment with earning as well as contributions are taxed at a later time.
Tax Free- Investments wherein earning are not taxed.
Teaser Rate- The low rate that is charged by a lender for an initial period in order to convince borrowers to agree to the credit terms.
Term Life Insurance- Life insurance that ensures coverage for a set period of time.
Thrift- Another term for a savings and loan.
Titanium Card- A type of credit card with a higher max limit than a platinum card.
Title- A legal document stipulating property ownership of the right of ownership of a property or security.
Title Insurance- Insurance that is designed to protect the policyholder from loss arising from disputes or claims pertaining to ownership of a property.
Total Debt Ratio- The total monthly debt and the housing payments divided by gross monthly income. Also referred to as Obligations-to-income Ratio or also Back-End Ratio.
Total Return- A security’s total return which reflections the income that it pays due to interest or dividends and also any change in the share price or principal value.
Trade-In Value- The amount a dealership will grant you for a vehicle as payment for a different vehicle.
Transaction Date- The date in which goods and services are acquired or purchased, or the date a cash advance is made.
Treasury Bill- A fixed-income security that is issued by the U.S. government having a maturity of more than 10 years at issue. It is protected by the government's full faith and credit (unconditional commitment to pay).
Trustee- An individual or organization that is granted the legal responsibility to manage assets in the best interest of another.
Two-Cycle Billing- In a two-cycle method, the daily average balance is determined by two billing cycles as opposed to just one, and the finance charges are usually higher.
Umbrella Liability Coverage- Supplemental, or additional liability insurance, providing more protection against lawsuits or other kinds of losses for which one is legally responsible.
Underwriting- The process necessary to verify data and approve loans.
Unearned Income- Income that is derived from investments as well as other sources that are not related to employment.
Universal Life Insurance- A life insurance policy with a cash value that offers life insurance protection and a savings vehicle—rate of return guaranteed.
Unsecured Debt- Debt that is not secured with any form of collateral—like many credit cards.
Unsecured Loan- A loan established based on a person’s agreement to pay without savings or other collateral as a guarantee—also referred to as a signature loan.
VA Mortgage- A type of mortgage in which only Veterans are eligible. The lender receives a guarantee to reduce loss from the VA. The required down payment for VA mortgage is usually very low.
Variable Annuity- Meaning payment amounts are never guaranteed, and are based on the performance of the investment.
Variable Interest Rate- An interest rate that alters, increases and decreases on a set schedule based on the outcome of the investment.
Variable Life Insurance- A type of insurance that offers coverage for a whole lifetime and increases savings over a span of time. You have the option of investing your savings a menu of mutual funds—usually are managed by the insurance company.
Whole Life Insurance- A type of life insurance policy that remains valid for an entire lifetime.
Will- A legalized document that stipulates how assets/property will be divided and distributed upon the death of a party.
Yield- The rate of return on a particular investment. Generally is represented as percentage rate. However, it does not include capital gains or losses.
Z Bond- Also referred to as an accrual bond or accretion bond. It is a bond in which interest accretes interest, however is not paid currently to the investor by is accrued. The accrual is added to the principal balance of the Z and becomes payable when the satisfaction of all previous bond classes is complete.
Zero-Balance Account (ZBA)- A type of checking account in which zero balance is managed by transfers of funds from a single master account in an amount large enough to cover checks presented but no more.