Accidental Death Benefit
An extra death benefit amount that is paid out in addition to the face amount of the policy if the insured dies as the result of an accident. It costs extra to get this, and usually cannot exceed more than the face amount of the policy.

Account History
A listing of all transactions on an account for a designated period of time.

Account Number
A number that uniquely identifies an account.

Account Statement
A summary of an account's activity.

Account Type
The kind of account, for example, checking, savings, or mortgage.

Adjustable Rate Mortgage (ARM)
A loan program with a rate which adjusts periodically on the basis of changes in a scheduled payment plan or specified index. Sometimes called a Variable Rate Mortgage.

Adjustment Period
This is the length of time for which the interest rate is fixed on an ARM. Therefore, if the adjustment period is six months, then the interest rate will remain fixed for six months, after which time it will adjust.

Amortization
The gradual reduction of debt that occurs as periodic payments are applied to loan principal and interest at a rate that repays the loan principal by the end of the loan term.

Amortization Tables
Tables of values that show the gradual reduction of debt that occurs as a loan is paid off.

Amount Due
The total amount due on a presented bill.

Annual Percentage Rate (APR)
An interest rate reflecting the cost of a loan as a yearly rate. This rate is likely to be higher than the stated note rate because it takes into account points and other credit costs. The APR allows borrowers to compare different types of loans based on the annual cost for each loan.

Annual Percentage Yield (APY)
A percentage rate that reflects the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a period of 365 days.

Appraisal
An estimate of the value of property made by a qualified professional called an "appraiser". Most states require licenses. Most lenders have their own lists of approved appraisers.

Appraisal Fee
A fee paid to determine the estimated market value of a property or asset.

Appreciation Rate
The percentage increase in the value of an asset expressed as an annual rate.

Assessment
The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.

Asset
Any item that has monetary value. Assets can include buildings, business equipment, cash, and investments.

Authorized Signature
The sign or mark of an individual who is authorized to issue instructions regarding the account.

Automated Clearing House (ACH)
A computerized facility that electronically processes debits and credits among member financial institutions.

Automated Teller Machine (ATM)
A machine that permits customers to perform various electronic banking transactions.

Automobile Liability Insurance
Protection for the insured against financial loss because of legal liability for car related injuries to others or damage to their property.

Automobile Physical Damage Insurance
Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils.

Available Balance
The amount of money in a deposit account that is available for a banking transaction. This balance is the portion of the current balance that no longer has any holds placed on it, plus any overdraft protection.

Beneficiary
The person designated to receive funds under a will, trust or insurance policy upon the death of a testator, grantor or insured, respectively.

Binder
A title insurance binder is the written commitment of a title insurance company to insure title to the property subject to certain conditions and exclusions. Also, a preliminary agreement, normally secured with earnest money, between a buyer and a seller as an offer to purchase real estate.

Binding Receipt
A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of receipt.

Business Day
Everyday except Saturday, Sunday, and legal holidays.

Business Insurance
Policies written for business purposes, such as key employee, buy-sell, business loan protection, etc.

Business Life Insurance
Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee.

Cash Value
The amount of money that a policy holder is entitled to if the policy is surrendered before the policy matures. Cash value insurance policies often accumulate a cash value that exceeds the premiums paid over an extended time period. Whole, universal, and variable universal life insurance policies have this feature.

Certificate of Deposit (CD)
A receipt for funds deposited into an account for a specified period of time bearing a higher rate of interest than a passbook account, if left to maturity.

Certificate of Occupancy
A document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan.

Check
A draft that directs a financial institution to make payment from a drawer's account to a named payee.

Checking Account
A transaction account on which checks may be drawn.

Closing
For a purchase transaction, a meeting between the homebuyer, seller, lender and title insurance company in which mortgage documents are signed and title to the property passes from seller to buyer. At the same time, the homebuyer receives the funds needed to purchase the property and pledges the property as security for repayment of the debt. For a refinance transaction, a meeting between the borrower, lender and title insurance company in which mortgage documents are signed and the homeowner pledges the property as security for repayment of a new debt. Sometimes called "Settlement".

Closing Costs
Expenses associated with transfer of title or refinance of a property. Some examples of closing costs are: realtor fees, appraisal fees and taxes.The costs associated with securing a mortgage and the sale and purchase of a property.

Collected Funds
Funds received by a financial institution.

Commitment
A promise by a lender to make a loan to a borrower on specific terms or conditions.

Compound Interest
Interest paid on accumulated interest as well as on the principal.

Confirmation Number
A number assigned to keep track of a transaction.

Current Balance
The amount held in a deposit account or the amount of loan debt at a specific time.

Debit Card
A card that enables an accountholder to obtain access to an account for the purpose of making withdrawals or for transferring funds to a third party by non-transferable order or authorization.

Deductible
An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.

Deed
A legal document transferring title of a property.

Deposit
The placement of cash, checks, or other drafts into an account.

Deposit Account
A checking, savings, money market, or certificate of deposit.

Depreciation
A decrease in value to property caused by deterioration or obsolescence.

Direct Deposit
An option that allows an account to have regularly scheduled payments, such as payroll or Social Security funds, deposited directly to a checking or savings account.

Disability Income Insurance
A form of health insurance that provides periodic payments to a person who is unable to work as a result of illness, injury, or disease.

Discount Point
Also called "points". A one-time charge paid to the lender at closing to obtain a lower interest rate on the mortgage loan. One point is equal to 1 percent of the loan amount. For example, two points on a $100,000 mortgage would cost $2,000.

Down Payment
The difference between the total sales price and the loan amount.

Electronic Bill Payment
A payment sent to a payee through Internet banking.

Electronic Funds Transfer (EFT)
A transfer of funds electronically.

Endorsement
The act of a holder of a note, bill, check, or other negotiable instrument, of assigning said instrument by signing the back of the instrument with or without qualifications.

Equity
The amount of the home that you actually own. Equity is the difference between the market value of the home and what you still owe on it.

Escrow Account
An account often required by the lender to pay taxes and insurance. Every time a mortgage payment is made, a portion goes into the escrow account. When the taxes and insurance bills are due on your home, the lender pays the bills with funds from this account.

Evidence of Insurability
A statement of proof of a person's physical condition and/or other factual information affecting his/her acceptance for insurance.

Face Amount
The amount of insurance provided by the terms of an insurance contract, usually found on the face of the policy. In a life insurance policy, it is the death benefit.

FDIC
Federal Deposit Insurance Corporation. The agency of the federal government that provides deposit insurance coverage for certain accounts.

Finance Charge
The total dollar amount that a loan will cost. This includes all interest payments during the term of the loan, interest paid at closing, if any, origination fees, and other charges paid to a lender or third party.

Fire Insurance
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.

Fixed Annuity
A tax deferred investment with a fixed rate of return that is designed to provide steady income for the policy holder in the retirement years.

Fixed Rate
An interest rate that remains the same as the original rate for the duration of a loan or deposit.

Flood Insurance
Insurance protecting against loss by flood. This is required by lenders in areas federally designated as potential flood areas.

Fixed Rate Mortgage
The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

Free Look
A period of time (usually 10 or 20 days) during which a policy holder may examine a newly issued individual life insurance policy, and surrender it in exchange for a full refund if not satisfied for any reason.

Good Faith Estimate
An estimate of charges that a borrower may incur in connection with a settlement.

Gross Income
Total income before taxes and deductions.

Hazard Insurance (Fire Insurance, Homeowner's Insurance)
Insurance on a property against fire and other risks. A homeowner's policy may have additional coverage for theft, liability, etc. that a fire insurance policy may not cover.

Home Equity Line of Credit
A revolving credit, collateralized by a mortgage, that allows a homeowner to borrow on the equity of a home.

Home Equity Loan
A fixed or variable rate loan, collateralized by a mortgage, that allows a homeowner to borrow on the equity of a home.

Homeowner's Insurance
A home buyer will be required to provide a one-year homeowner's insurance policy from an insurance company acceptable to the home buyer's lender. The home buyer will be required to prepay the premium for one year from the date of closing. If the home buyer is refinancing, the policy must be in effect for 12 months after the closing date. The lender will tell the home buyer how much coverage is required when the commitment letter is issued.

HUD-1 Settlement Statement
A document, prepared by the settlement agent, that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. The HUD-1 statement is also know as the "closing statement" or "settlement sheet".

Index
A benchmark number used to compute the interest rate for an adjustable rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury Bills.

Inflation
The increase in the cost of living expressed as a percentage increase over the previous year's prices.

Initial Interest Rate
The starting interest rate of an adjustable rate mortgage.

Insufficient Funds
An occurrence where an account holder's withdrawals are greater than the amount of deposits, which results in a negative balance.

Insurable Risk
The conditions that make a risk insurable are (a)the peril insured against must produce a definite loss not under control of the insured, (b)there must be large number of homogeneous exposures subject to the same peril, (c)the loss must be calculable and the cost of insuring it must be economically feasible, (d)the peril must be unlikely to affect all insured's simultaneously, and (e)the loss produced by a risk must be definite and have a potential to be financially serious.

Insured
A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under policy terms.

Insured Life
The person on whose life the policy is issued.

Insurer
The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.

Interest
Consideration in the form of money paid for the use of money. Also a right, share or title in property.

Interest Rate Cap
A limit on the amount the interest rate on an adjustable rate mortgage may change per year and/or over the life of the loan.

Interest Only Payments
Loan related payments that are applied only to the interest due or past due and not to any of the principal.

IRA
Individual Retirement Account. A trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries that meets the requirements of Section 408 of the Internal Revenue Code (26 U.S.C. 408).

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Keogh
May be a Qualified Retirement Plan. An account held by an institution or trustee into which a self employed individual can make payments to himself and/or his employees. A Keogh can be handled as a profit sharing plan or a money purchase plan.

Key Person Insurance
Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.

Liability
Debt owed to someone else.

Lien
A claim or charge against property. Property is said to be encumbered by a lien and the lien must be removed to clear title.

Liquidity
A term that refers to the ease or difficulty of converting financial assets or investments into cash.

Loan Application
The source of information on which the lender bases a decision to make the loan; defines the term of the loan, gives the name(s) of the borrower(s), place of employment, salary, bank accounts and credit references, and, if applicable, describes the real estate that is to be mortgaged. It also stipulates the loan amount being applied for.

Loan-to-Value Ratio
The ratio between the amount of a given mortgage loan and the lower of sales price or appraised value.

Loss
The happening of the event for which insurance pays.

Margin
A fixed number added to the index to compute the rate on an adjustable rate mortgage.

Medical Information Bureau (MIB)
A data service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most life insurers subscribe to this bureau to get more complete underwriting information.

Money Market Account
A savings account on which interest may be paid if established in accordance with the requirements of Section 561.28 of Title 12 of the Code of Federal Regulations, which includes limited transfer privileges.

Mortgage
A written instrument that creates a lien upon real estate as security for the payment of a specified debt.

Mortgage Disability Insurance
A disability insurance policy that will pay the monthly mortgage payment in the event of a covered disability of the insured borrower for a specified period of time.

Mortgage Insurance (MI)
A type of insurance charged by most lenders to offset the risk of your loan when your down payment is less than 20% of the value of the home.

Mortgage Term Life Insurance
Pure protection designed to utilize the death benefit proceeds to pay off mortgage debt.

Mutual Funds
Mutual funds are comprised of securities in a variety of industries and companies. Each investor within the fund owns interest in each security which allows for investment diversification.

Non Sufficient Funds (NSF)
Same as Insufficient Funds.

Note
A written agreement to repay a loan. The agreement, which is sometimes secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt and renders the borrower personally responsible for repayment.

Number of Payments
Indicator for how many monthly or periodic payments are to be scheduled.

One Time Payment
Payment paid one time, on a date specified.

Origination Fee
A fee that the lender may charge the borrower for the service of creating the mortgage loan. This fee is usually stated as a percentage of the loan.

Ownership
Rights to the use, enjoyment and alienation of property, to the exclusion of others.

Password
A code that identifies a user when the user signs on.

Payment Cap
A limit on the amount that monthly payments on an adjustable rate mortgage may change.

Payment Date
Date on which a scheduled payment is to be processed.

Payment Frequency
The time interval between payments. For example, weekly payments will occur every seven days from the start date. Monthly payments will occur on the same date as the start date for each month. Payments started on the last day of the month will occur on the last day of subsequent months.

Peril
The cause of a loss insured against in a policy.

Personal Identification Number (PIN)
A code that a customer uses to access an account at an ATM or POS terminal.

Personal Lines of Insurance
Those types of insurance, such as auto or home insurance, for individuals or families rather than for business or organizations.

Pest Inspection
An inspection conducted by a pest inspection company to determine whether there is an infestation of termites or other pests in a home.

Policy Term
The period for which an insurance policy provides coverage.

Policyholder
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation, usually the same person who pays the premium although it can be someone else.

Premiums
The amount payable for an insurance policy.

Principal
The amount of debt or investment, not including interest.

Private Mortgage Insurance
Insurance written by a private company protecting the mortgage lender against loss resulting from a mortgage default.

Property Damage Coverage
An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.

Property Insurance
Provides financial protection against loss or damage to the insured property caused by such perils as fire, windstorm, hail, etc.

Property Tax
A government levy based on the market value (as assessed by the county assessor's office) of the property.

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Real Estate Brokerage Fee
The amount paid to a real estate firm for listing and/or selling the home.

Real Estate Settlement Procedures Act (RESPA)
A federal law requiring lenders to provide home mortgage borrowers with information on known or estimated settlement costs. It also establishes guidelines for escrow account balances.

Recording Fee
The amount paid to a county clerk or recorder's office in order to make a document a matter of public record.

Refinancing
The repayment of a debt from the proceeds of a new loan using the same property as security.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policy holder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal, usually every 5, 10, 15, or 20 years, as the age of the insured increases.

Revolving Credit
Credit in which a borrower can draw on a credit line up to the limit of the line, repay some of the loan, and draw on it again up to the limit of the line. Sometimes the lender may require periodic minimum payments or clean up periods, where the disbursed amount is payed down to zero.

Roth IRA
A type of Individual Retirement Plan as defined in Section 7701 (a)(37) of the Internal Revenue Code. Roth IRA's have higher AGI limits, contributions are never tax deductible, all distributions can be tax free (not merely tax deferred), and distributions are never mandatory.

Savings Accounts
Interest bearing deposit accounts that can be either passbook or statement format.

SEP
Simplified Employee Pension Plan. It allows private employers with 25 or fewer people to make tax deductible contributions to its employees' IRAs.

Single Premium Life Insurance
An insurance contract requiring one payment which earns a current rate of interest usually guaranteed for one year at a time. It has a guaranteed death benefit significantly higher than the single premium payment made by the insured/owner.

Surrender Charge
A cancellation charge associated with some non-term life insurance policies that the policy holder pays to the insurer. They are usually expressed as a percentage of the initial payment or the cash value of the policy.

Tax Deductible
An investment that can be deducted from a person's taxable gross income.

Tax Deferred
An investment that allows a person to postpone the owed taxes to a later date.

Term
The length of time of a loan or deposit agreement.

Title
A legal document evidencing a person's right to or ownership of a property.

Title Insurance
An insurance policy which protects the insured against loss arising from defects in title. An Owner's Policy is purchased by the homebuyer at closing and remains in effect for as long as the homebuyer owns the home. A lender may require that a separate policy, naming the Lender as the insured, called a Lenders' Title Insurance Policy, be purchased by the borrower whenever a loan in which property is pledged as security is given. This policy is in effect for as long as the loan remains outstanding.

Title Report
A document indicating the current state of title. The report includes information on the current ownership, outstanding deeds of trust or mortgages, liens, easements, covenants, restrictions, and any defects.

Title Search
An examination of the public records to determine the ownership and encumbrances affecting the property.

Transaction Amount
The dollar amount of a financial transaction.

Transaction Date
The date that indicates when a transaction is processed.

Uncollected funds
Funds not yet received by a financial institution.

Underwriting
The decision whether to make a loan to an applicant based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.

Universal Life Insurance
A flexible premium life insurance policy under which the policy holder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at a rate which may change from time to time.

Variable Annuity
A variable annuity is a contract between an investor and an insurance company under which the insurer agrees to make periodic payments to the investor, beginning either immediately or at some future date.

Variable Life Universal Insurance
A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity based benefit feature of variable life insurance.

Variable Rate Mortgage
See Adjustable Rate Mortgage.

Waiver of Premium
A provision of a life insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled.

Wire Transfer
An electronic transfer of money from one financial institution to another financial institution or other third party.

Whole Life Insurance
A plan of insurance for the whole of life which builds cash values. Premiums are usually paid for life although there are limited payment plans available.

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