The Center For Debt Management
Debt Relief

Credit and Financing

Home Mortgage

Home Refinance

Second Mortgage

Reverse Mortgages

Home Equity Loans

VA Home Loans

FHA Loans


Credit Cards

Reward Cards

Debit Cards


Cash Advances

Payday Loans

Personal Loans


Auto Loans

Motorcycle Loans

Auto Refinance


Consolidation Loans

SubPrime Loans

Military Loans

Student Loans

Business Loans


Mortgage Rates

Interest Rates

Credit Report


Financial Library

Financial Bookstore


 

Glossary of
FinanciaI & Real Estate Terms

In an effort to help our visitors understand the terms used in the financial world, we have put together a glossary of over 500 financial terms. These terms are used in credit, financing, debt, real estate, accounting, banking, law, etc.

Simply scroll to view an alphabetical listing of the terms. You may also click on any letter of the alphabet listing and you'll be taken to a page of listed terms starting with that letter. Alternatively, you may go to an index listing each term.

A  |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  L  |  M
N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  Z


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

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

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

Acquisition Cost : Under an FHA loan, the appraised value or purchase price of the property plus the estimated closing costs.

Adjustable Rate Mortgage (ARM) : A mortgage in which the interest rate may be adjusted periodically based on an index. For example, a 1 Year Adjustable Mortgage is a loan with a fixed rate for the first 1 year after which the rate changes once each year for the remaining life of the loan. Because the interest rate can change after the first 1 year, the monthly payment may also change. The same is applicable in case of 2, 3, 7 and 10 year of adjustable (ARM).

Adjustment Date : The date the interest rate changes on an adjustable rate mortgage.

Adjustment Interval : The time between changes in the interest rate charged on an adjustable rate mortgage. For example, one, three or five years.

Adjusted Book Basis : The purchase price of a property plus any capital improvements less accrued depreciation, if any, to the date of the sale.

Administration Order : An order made in a county court to arrange and administer the payment of debts by an individual

Adverse Credit History : Also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history and bad credit history, is a negative credit rating. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.

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

Agency Debt : A type of bond issued by a corporation that is nominally independent of the government - though ownership may be public or private - but considered to be backed by the government, usually on a de facto basis.

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

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

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

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

Annual Debt Service : Total yearly amount a company pays out in principal and interest for a loan.

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

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

Annuity : A series of income payments of receipts over a period of years.

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

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

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

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

Appreciation : The Increase in property value due to fluctuations in the market, inflation, etc.

Arrears : Arrears occur when you fail to meet the contractual payments to your household bills. Missing payments to your mortgage, rent or council tax etc can lead to serious arrears, which must be paid immediately. You can also be in arrears if you don't maintain your payments on unsecured debts. Arrears will accumulate if you continue to miss payments
and you will be required to pay an additional amount on top of the regular payments until
the arrears are cleared.

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

Assessment : A determenation of a property's value for the purpose of taxation.

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

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

Assumable Loan : A loan that may be passed on from a seller of a home to the new home owner. The buyer "assumes" all outstanding payments.

Assumable Mortgage : A mortgage that provides for a buyer to "assume" all outstanding payments when a home is sold. The buyer usually must meet qualification standards to assume a loan.

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

Assumed Debt : A debt obligation of an acquired company that becomes an obligation of the acquirer.

Auto Refinance : A refinance auto loan is a loan secured by a car that is paid off at a time.

Automatic Stay : An injunction that automatically stops lawsuits, foreclosure, garnishments and all collection activity against the debtor once a bankruptcy petition has been filed.

Average Daily Balance : The average daily balance is a method used to calculate finance charges. It is calculated by adding the outstanding balance on each day in the billing period, and dividing that total by the number of days in the billing period. The calculation includes new purchases and payments.

Automated Teller Machine (ATM) : Electronic terminals located on bank premises or elsewhere, through which customers of financial institutions may make deposits, withdrawals, or other transactions as they would through a bank teller.

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

Bad Debt Recovery : A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. "Bad Credit" can result in being denied credit.

Bad Credit : Money that is collected on a bad debt account.

Bad Debt Reserve : An amount that is set aside by a company as reserve for bad debts.

Bad Debt Write-Off : Customer's account that is written off  and removed from the books.

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

Balance Transfer : Moving a balance (debt) from one credit card to another. This is often done with special checks or forms, or may be offered as an option on some credit card applications. The usual reason is to shift an ongoing debt to an account with a lower interest rate.

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

Balloon Mortgage : A mortgage that acts like a fixed-rate mortgage for a set number of years (usually five or seven) and then must be paid off in full in a single "balloon" payment. These loans are popular with those expecting to sell or refinance their property within a definite period of time.

Balloon Payment : A lump sum payment on a purchase or conditional sale or lease agreement that may be charged at the end of a loan or lease.

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

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

Beacon Score : This is your credit score that creditors look at when determining if you are credit worthy. Your Beacon Score is determined by negative entries such as late payments which would decrease your score or a positive, timely payment history on your accounts which would increase your score.

Bequest : A personal property which has been gifted to an individual and this arrangement is mentioned in the will.

Best Faith Estimate : An estimate of the total costs of securing a mortgage or real estate loan, that is given to borrowers prior to closing.

Bill of Sale : A written document that transfers a title to personal property.

Billing Cycle : The number of days between statement dates. This is generally about 25 days.

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

Biweekly Mortgage : A mortgage loan payment that requires a payment twice monthly, yielding thirteen payments per year instead of twelve. As a result, it significantly reduces the time a principal is paid off.

Bona Fide : Undertaken in good faith.

Bonded Labor : A means of paying off loans with direct labor instead of currency or goods. It is either a kind of indenture or truck system, and is a form of unfree labor.

Blanket Mortgage : A mortgage thar is secured by pledging more than one property or asset as collateral.

Bonded Debt : The portion of a corporation's or state's indebtedness that is represented by the bonds it has issued.

Book Value : Acquisition costs less any accrued depreciation.

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

Bridge Loan : A secured equity loan to solve a short-term financing problem.

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

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

Budget Mortgage : A mortgage that includes a portion for taxes and insurance as well as principal and interest.

Bureau of the Public Debt : An agency of the United States Department of the Treasury. This Treasury Bureau borrows money needed to operate the Federal Government, accounts for the resulting debt, and provides reimbursable services to other Federal agencies. Borrowing is done by selling US Treasury bills, notes, bonds and TIPS, as well as US Treasury savings bonds. The bureau pays interest to investors and redeems investors' securities.

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

Buydown : A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.

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

Callable Debt : A debt security in which the issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity date.

Cancellation of Debt : Occurs when a creditor forgives a debt. Cancellation of debt is taxable as income unless the creditor intended it as a gift or it meets certain exceptions relating to bankruptcy, insolvency, or farming.

Capital : Money and other property of a person, business corporation or other enterprise used in transacting the business.

Capital Account : An account of the net value of a business at a specified date.

Capital Asset : A long-term asset that is not purchased or sold in the normal course of business. Generally, it includes fixed assets, e.g., land, buildings, furniture, equipment, fixtures and furniture.

Capital Budget : The estimated amount planned to be expended for capital items in a given fiscal period. Capital items are fixed assets such as facilities and equipment, the cost of which is normally written off over a number of fiscal periods.

Capital Contribution : Cash or property acquired by a corporation from a shareholder without the receipt of additional stock.

Capital Expendure (CAPEX) : The amount used in business during a particular period to acquire or improve long-term assets such as property, plant or equipment.

Capital Funds : The total of capital debentures and capital stock, if any, surplus, undivided profits, unallocated reserves, guaranty fund, and guaranty fund surplus.

Capital Gain : The amount in excess of the selling price over the purchase price, which may be given special treatment for tax purposes provided the sale takes place more than a given number of months after purchase.

Capital Improvement : In general, it is any value added activity or cost to a long-term or permanent asset that increases its value. In real estate, it is any permanent structure or other asset added to a property that adds to its value.

Capital Loss : The amount in excess of the purchase price over the selling price when the assets have been held for more than a certain period of time and which is given a special treatment for tax purposes.

Capitaization : The statement of capital within the firm, either in the form of money, common stock, long-term debt, or in some combination of all three. It is possible to have too much capital (in which case the firm is overcapitalized) or too little capital (in which case the firm is undercapitalized).

Caps : A set percentage amount by which an adjustable rate mortgage may adjust each adjustment period. For adjustable loans, caps are usually quoted as two numbers as in 2/6. The first number indicates how much a loan may adjust at each adjustment period while the second number indicates how much a loan may adjust over its lifetime. Loans like the 3/1 and 5/1 adjustable which have an initial fixed period are quoted with 3 numbers as in 3/2/6 which would mean that the first adjustment may be as much as 3%, subsequent adjustments are capped at 2% each, and the lifetime cap is 6%. Two-Step loans are quoted with a single cap, which is the amount by which the loan may adjust at its single adjustment date.

Carryback Loan : A loan in which a seller agrees to finance a buyer in order to complete a property sale.

Cash Advance Loan : A loan where a borrower gets cash advanced based on his paycheck. These loans generally up are up $500 and must be repaid on the next payday.

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

Cash Available for Debt Service : Ratio of cash assets to debt service. It is used in evaluating the risk of a project or firm. The higher the ratio the less likely the firm or project will fail to meet its debt obligations.

Cash Flow : Earnings before depreciation and amortization. Cash flow is calculated as the difference between cash inflows and outflows. Cash flow can be derived from Operating Profit by adjusting for items which do not affect payments (e.g. depreciation) and items (e.g. changes in working capital) which affect payments but are not recorded in operating profit.

Certificate Of Deposit (CD) : A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Eligibility : A certificate which shows a veteran's evidence of entitlement for a VA guaranteed loan.

Certificate of Reasonable Value (CRV) : An appraisal that has been performed on a property that is being paid for a VA loan. After the property has been appraised, the Veterans Administration issues a CRV.

Chapter 7 : The chapter of the Bankruptcy Code that allows for liquidation  of all assets of the individual or company to clear debts. It is also known as straight bankruptcy.

Chapter 11 : This is a reorganization bankruptcy. It is filed by companies or partnerships. A debtor filing for bankruptcy under Chapter 11 generally proposes a reorganization plan to keep the business alive and make it profitable and pay creditors over a period of time.

Chapter 12 : The chapter of bankruptcy Code providing relief for debts of a family farmer .

Chargeback : Occurs when a credit card processor charges back  to the merchant the cost of returned items or incorrect orders that the customer claims were made to his or her credit card.

Claim : A creditors assertion of right to money from the debtor or debtor's property.

Clear Title : A title that is free of liens or any legal question as to the ownership of the property.

Closed-end Credit : Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed- end agreements.

Closed-End Lease : A lease in which you are not responsible for the difference if the actual value of the item at the scheduled end of the lease is less that the residual value, but you may be responsible for excess wear-and-use charges and for other lease requirements.

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

Closing Costs : Fees that are paid by the borrower when a property is purchased or refinanced. Typical costs incurred include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charges. All closing costs are separated into "non-recurring," and "pre-paid." Non-recurring charges are any items that are paid only once because a loan was obtained or a property bought, such as a loan origination fee. Pre-paid charges are those that recur over time, like insurance and property taxes. These are summarized in the Good Faith Estimate.

Cloud : An outstanding claim or encumbrance, that, if valid, would affect or impair the owner's property title.

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

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

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

Conforming Loan : A loan for up to and including $417,000 in the continental United States (Alaska and Hawaii limits are higher).

Construction Loan : A short term loan for funding the cost of constructing real property. The lender advances funds to the builder as the work progresses.

Consumer Credit Counseling Service : A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time.

Consumer Debt : Consumer credit which is outstanding. In macroeconomic terms, it is debt which is used to fund consumption rather than investment.

Conventional Mortgage : A mortgage loan that is obtained without having any additional guarantees for repayment, such as, FHA insurance, VA guarantees, or private insurance. This loan is usually given at an 80% loan-to-value ratio.

Conversion : The right of a borrower to convert an adjustable or balloon loan into a fixed loan.

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

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

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

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

Credit Card Debt : Unsecured consumer debt, accessed through the use of credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

Credit File : A file held by authorised companies with financial history regarding credit applications and credit you have borrowed.

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

Credit Insurance : Health, life, accident, or dispurtion of income insurance designed to pay the outstanding balance of debt.

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

Credit Line : The maximum amount of money available in an open-end credit arrangement such as a credit card, or overdraft protection.

Credit Loan : A mortgage that is issued on only the financial strength of a borrower, without any regard for collateral.

Credit-Loss Ratio : The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit Rating : Assesses the credit worthiness of an individual. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender the probability of the subject being able to pay back a loan. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates.

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

Credit-Related Expenses : The sum of foreclosed property expenses plus the provision for losses.

Credit-Related Losses : The sum of foreclosed property expenses plus charge-offs.

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

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

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

Credit Score : A number, roughly between 300 and 800, that reflects the credit history detailed by a person's credit report. Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make.

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

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

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

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

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

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

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

Consumer Debts : Debts incurred for personal reasons and not corporate requirements.

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

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

Credit Reference : Information, the name of an individual, or the name of an organization that can provide details about an individual's past track record with credit. Credit rating agencies typically fill this role in the case of consumer credit; potential lenders consult the credit rating agency for information on an applicant as part of their process for deciding whether or not to grant credit to the applicant.

Credit Risk : The risk of loss due to a debtor's non-payment of a loan or other line of credit (either the principal or interest, or both).

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

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

Debt : Amount of money owing to a company or person.

Debt-Asset Ratio : The ratio of a company's liabilities to its total assets. Long-term debt-assets is the ratio of long-term liabilities (those that won't be paid off in one year) to total assets.

Debt-Based Asset : An investment in the debt of another party. Savings accounts, bonds, annuities, and certificates of deposit are all debt-based assets because they represent debt of the issuer. Debt-based assets are generally conservative investments that pay a fairly predictable rate of return.

Debt-Equity Ratio : Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.

Debt-Equity Swap : A refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt.

Debt-to-Available-Credit Ratio : The amount of money a person has in outstanding debt, compared to the amount of credit available on all of the individual''s credit cards and credit lines. The higher a person''s debt to available credit, the more risky the individual appears to potential lenders.

Debt-to-Equity Ratio : Total liabilities divided by the owner's total equity stake.

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

Debt-to-Worth Ratio : Ratio that measures the financial leverage of a company. This ratio is defined as total liabilities divided by net worth. Low debt-to-worth ratio spells minimal risk for both the lender and business owner.

Debt Adjustment : An arrangement made for the repayment or satisfaction of debts in an amount or manner that differs from the original agreement.

Debt Bondage : A means of paying off loans with direct labor instead of currency or goods. It is either a kind of indenture or truck system, and is a form of unfree labor.

Debt Capacity : The ability to borrow. The amount a person or firm can borrow up to the point where the firm's value no longer increases.

Debt Capital : The capital that a business raises by taking out a loan. It is a loan made to a company that is normally repaid at some future date. Debt capital differs from equity or share capital because subscribers to debt capital do not become part owners of the business, but are merely creditors, and the suppliers of debt capital usually receive a contractually fixed annual percentage return on their loan, and this is known as the coupon rate.

Debt Ceiling : The maximum borrowing power of a person, business or governmental entity.

Debt Collection Agency : A business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed. Some agencies, sometimes referred to as "debt buyers", also purchase debts from creditors for a fraction of the value of the debt and pursue the debtor for the full balance. Creditors typically send debts to a collection agency in order to remove them from their accounts receivable records; the difference between the amount collected and the full value of the debt is then written off as a loss.

Debt Collector : A person employed by a creditor or debt collection agency who's purpose is to collect on a debt.

Debt Compliance : Describes various legal measures taken to ensure that creditors, whether individuals, businesses, or governments, honor their debts and make an honest effort to repay them. Generally regarded as a subdivision of tax law, debt compliance is most often enforced through a combination of audits and legal restrictions.

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

Debt Counselor : A professional person who provides advice on repaying or eliminating debt.

Debt Financing: : When a business raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.

Debt Forgivenes : The partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations.

Debt Leverage : Use of debt to increase investment. Used by a company to increase the overall amount invested, thus hopefully also increasing returns to shareholders.

Debt Limit : The maximum borrowing power of a person, business or other entity.

Debt Management Plan : A Debt Management Plan (DMP) is an informal debt repayment arrangement between a debtor and their creditors.

Debt Ratio : The proportion of a busines's total assets that are being financed with borrowed funds. The debt ratio is calculated by dividing total long-term and short-term liabilities by total assets. Assets and liabilities are found on a company's balance sheet.

Debt Relief : An arrangement intended to reduce the burden of debt, including forgiveness of part or all of what is owed to creditors.

Debt Retirement : The complete repayment of debt.

Debt Security : Security that represents the money a company borrows such as a note, bond, commercial paper or bill.

Debt Service : Total payments due on loans (repayments plus interest).

Debtor : A debtor is someone who is in debt and is required to repay their creditors.

Debtor in Possession : A company that continues to operate under the Chapter 11 bankruptcy process.

Debtor Nation : A country whose assets owned abroad are worth less than the assets within the country that are owned by foreigners.

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

Deed of Trust : A legal document that conveys title to real property to a third party. The third party holds title until the owner of the property has repaid the debt in full.

Default : If the debtor fails to meet the commitments in legal obligations which are mentioned in the contract, it is known as default.

Default Notice : A notice issued by a creditor when a financial agreement that was been made between you and your creditor fails because the arrangement has not been kept. A default notice is the lender informing you that they are intending to take step to recover the money you owe them.

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

Deficit : If your income is less than your expenditure i.e. you are spending more than you are bringing in, this is a deficit. Reducing your outgoings or increasing your income can assist in a financial deficit.

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

Dependent : People who rely on others for their living requirements and have no income of their own, for example children and homemakers.

Deposit : A lump sum given in advance as security. A deposit is always paid of a larger amount to be paid in the future. In mortgage and real estate terms, this is called the "earnest money deposit."

Depreciation : In real estate and mortgage terms, the decline in the property value.

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

Discharge : A release issued by the court relieving the debtor from personal liability of all dischargeable debts. Not to be confused with a "charge off" or "write off" which is an accounting term which does not erase debts.

Dischargeable : Debt: A debt from which the debtor can be released based on the Bankruptcy Code.

Discount : An amount deducted from the regular price for those who purchase with cash instead of credit.

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

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

Down Payment : Money that is paid to a seller by a buyer from his own funds, as opposed to that portion of the purchase price which is financed.

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

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

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

Easement : Giving other persons, other than the owner, access to a property.

Effective Debt : The total debt owed by a company to its creditors.

Elderly Applicant : As defined in the Equal Credit Opportunity Act, a person 62 or older.

Electronic Fund Transfer (EFT) Systems : A variety of systems and technologies for transferring funds electronically rather than by check.

Eminent Domain : The government's right to take private property for public use in exchange of the payment of its fair market value.

Encumbrance : A lien against a property or a restriction on its use, such as, an easement, a right or interest in a property held by one who is not the legal owner.

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

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

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

Escalator Clause : A clause in a mortgage or loan that provides for increases in payments or interest based on a pre-determined scheduled or on a specific economic index, such as, the consumer price index.

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

Escrow Account : An account that a borrower holds with a lender once a purchase transaction is closed. It requires the borrower to pay more than the principal and interest each month. The overage is put into escrow, which the lender uses to pay items like property taxes and homeowner's insurance when they are due.

Escrow Analysis : An analysis that is performed each year by a lender to an escrow account holder to ensure that the correct amount of money is being collected to cover anticipated payments.

Escrow Fee : A fee that covers the preparation and transmission of all home purchased-related documents and funds. Escrow fees may range from hundreds to over a thousand dollars, based on the purchase price of the real estate.

Estate : The ownership interest that a person holds in real property. This is typically the sum total of all the real property and personal property owned by an individual at time of death.

Eviction : The legal removal of occupants of real property for unlawful actions carried out by those occupants.

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

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

Exemptions : This refers to assets or properties owned by the debtor that cannot be recovered by creditors.

401K / 403B : An investment plan sponsored by employers that allows individuals to set aside tax-deferred income for retirement or emergency purposes. A 401(k) applies to private corporations, while a 403(b) applies to non-profit organizations.

401K / 403B Loan : A loan that can be taken against the funds accumulated in a 401(k) or 403(b) plan, if allowed by the plan administrator. Loans against these plans are an acceptable source of down payment for most types of other loans.

Fair Credit Reporting Act : A federal law that protects consumer by regulating the reporting of consumer credit by agencies and establishes procedures for correcting errors on an individual record.

Fair Debt Collection : Broadly refers to regulation of the debt collection industry at both the U.S. Federal and state levels of government. At the Federal level, it is primarily governed by the Fair Debt Collection Practices Act ("FDCPA"). In addition, many U.S. States also have debt collection laws that regulate the credit and collection industry and give consumer debtors protection from abusive and deceptive practices. Many state laws track the language of the FDCPA, so that they are sometimes referred to as "mini-FDCPAs".

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

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

Fannie Mae (FNMA) : The Federal National Mortgage Association is a congressionally chartered, shareholder-owned company. It is the nation's largest supplier of home mortgage funds.

Fannie Mae's Community Home Buyer's Program : A program that offers flexible underwriting guidelines to subsidize a low-to-moderate-income family's purchase of a home. The program typically decreases the total amount of cash needed to purchase a home.

Federal Housing Administration (FHA) : An federal agency under the U.S. Department of Housing and Urban Development (HUD). It insures loans made by approved lenders to qualified borrowers, in accordance with its regulations.

Fee Simple : A fee without limitation to any class of heirs; they can sell it or give it away. It is the total or absolute ownership of real property and the best title that one can obtain, as it conveys the highest bundle of rights to the home owner.

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

FHA Loan : A government mortgage loan that is backed up and supported by the US FHA and the Department of Housing and Urban Development (HUD).

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

Final Discharge : A final discharge will be posted to you to show the end of your bankruptcy. This document will mean you are free from debt and the bankruptcy is over.

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

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

Firm Commitment : A lender's agreement to provide a loan to a specific borrower on a specific property.

First Meeting of Creditors (341 Meeting) : The First Meeting of Creditors in which the debtor is questioned under oath by the creditors, the trustee, examiner and/or the United States Trustee about his or her financial affairs.

First Mortgage : A mortgage that has priority over other mortgages.

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

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

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

Fixed-Rate Mortgage : A mortgage where the interest rate does not change for the life of the loan.

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

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

Forbearance : The postponement for a limited time period of a portion or all the payments on a loan when a borrower is delinquent. It may also lower the interest rate due to a creditor.

Foreclosure : A legal procedure in which real estate is sold by the lender to pay a defaulting borrower's debt.

Foreign Debt : Money owed to another country, resulting from a deficit balance of trade or a loan.

Fraud : Deliberately deceiving someone with false information about yourself in order to gain an advantage.

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

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

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

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

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

Good Faith Estimate : An estimate of charges and fees which a borrower is likely to incur in connection with a loan closing.

Government Loan : A type of mortgage insured by the FHA (Federal Housing Authority), VA (Veteran's Administration), or RHS (Rural Housing Authority).

Government National Mortgage Association (Ginny Mae) : Ginny Mae provides funds for government loans and takes over special assistance and liquidation functions of Fannie Mae.

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

Graduated Payment : Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.

Grantee : The person to whom an interest in real property is conveyed.

Grantor : The person conveying an interest in real property.

Gross Debt : All long-term debt incurred and outstanding.

Gross Monthly Income : The total amount a borrower earns per month, not including any taxes or expenses. It is often used in calculations to determine if a borrower qualifies for a particular loan.

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

Guarantees : When a person has assured the creditor that the debtor will make the repayments. If the debtor fails to make the payments the guarantee will be liable for them.

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

Home Equity Conversion Mortgage (HECM) : A mortgage that provides that the lender makes payments to the individual, instead of the individual making payments to a lender. It allows older homeowners to convert home equity into cash, in the form of monthly payments. Borrowers do not qualify on the basis of income, but on the value of his or her home. The loan does not have to be repaid until the borrower no longer occupies the property.

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

Home Equity Loan : Home equity loan is a loan based on the amount of equity a homeowner has in the property. The interest paid on a home equity loan is usually deductible. Unlike a home equity line of credit (HELOC), the home equity loan features a fixed rate, payment and term, usually five to 15 years.

Home Inspection : A thorough assessment by a professional regarding the structural and mechanical condition of a property.

Homestead : The principle place of residence of a debtor whether a house, apartment, condo or any other.

Homeowner's Insurance : An insurance policy that combines personal liability insurance and hazard insurance for a home and its contents.

Homeowner's Warranty : An insurance policy that is purchased by a buyer, or may be provided by a seller, that covers certain home repairs, should they be necessary over a certain period.

Housing Ratio : The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

HUD : Department of Housing and Urban Development who regulates Fannie Mae and Ginny Mae.

Hybrid Financing : The joining together of two forms of finance, such as combining a convertible loan with a participation loan, under which the lender has the right at loan maturity to convert the debt to a 50% ownership in the property.

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

Index : A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one, three and five year U.S. Treasury Security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average Costs-of-Funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down.

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

Insolvency : Having insufficient funds to meet all debts, or being unable to pay debts as and when they fall due.

Installment Debt : Debt that is issued on the basis of regularly occurring intervals for payment by the debtor, until the principal and interest are paid in full.

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

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

Interest Only Loan : A term loan arrangement which calls for payments of interest only, and does not include any amount for principal.

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

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

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

Interest Rate Swap : A transaction between two parties, in which each agrees to exchange payments tied to different interest rates or indices for a specified period of time.

Intermediate Term Mortgage : A mortgage loan with a stated maturity at the time of purchase that it is equal to or less than 20 years.

Internal Debt : The part of a country's debts that is owed to creditors who are citizens.

Introductory Interest Rates : In order to give an attractive deal many companies waive off or lower their initial interest rates. After a period of time, however, these low rates might change to high rates like other companies charge.

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

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

Joint Petition : A bankruptcy petition filed jointly by husband and wife.>TEXT

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

Judgment Debt : A debt established or confirmed by decree of a court of law.

Judicial Foreclosure : A court procedure used by lenders to secure clear title to a property under a defaulted real estate loan.

Jumbo Loan : A loan for $417,001 or more in the continental United States (Alaska and Hawaii limits are higher). These limits are set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Junior Debt : A finance term to describe debt that is unsecured or has a lesser priority than that of an additional debt claim on the same asset. This means that if the party that issued the debt defaults on it, people holding subordinated debt get paid after the holders of the "senior debt". A subordinated debt therefore carries more risk than a normal debt.

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

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

Lease: : A written agreement between a property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.

Leasehold Estate : An estate for a fixed length of time, established when a landlord gives up possession of real estate to a tenant, giving the tenant an equitable interest in the property, as defined by lease terms.

Lease Option : A rental agreement indicating a tenant's option to purchase a property. Monthly payments consists not only of rent, but an overage that can be applied towards a down payment on an already established amount.

Lessor : The persona or organization who regularly leases, offers to lease, or arranges for the lease of the item.

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

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

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

Liability : Legal responsibility to repay debt. Also, sometimes credit card companies may state that they are not responsible or liable if your card is misplaced, which means that they are not liable.

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

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

Life of Loan Cap (Lifetime Cap) : The maximum interest rate that can be charged during the life of the loan. This value is often expressed as an increment above the initial loan rate. For example, an adjustable rate loan with an initial rate of 7.25% and a 6% lifetime cap will never adjust above a rate of 13.25% (7.25+6.0).

Liquidation : The process of sale of a debtor's property and assets for cash to help repay creditors. Also, when a business/company is terminated or made bankrupt, all company assets are sold off and the proceeds go to pay the creditors. Any remaining money is distributed between the shareholders.

Liquidated Debt : Undisputed debt.

Loan : The principal, or total amount of money borrowed, that is to be repaid to the lender with interest.

Loan Amount : The amount of money borrowed from a person, company or financial institution. For example, in real estate, subtracting the down payment from the purchase price of the home will provide you with the loan amount.

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

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

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

Loan Officer : An intermediary between borrowers and lending institutions. A loan officer solicit loans, represent creditors to borrowers, and represent borrowers to creditors.

Loan Origination : What the process of obtaining a new loan is called.

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

Loan Servicing : A service performed by a lender to protect their interest or a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies.

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

Loan-To-Value Ratio (LTV Ratio ) : The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. A LTV ratio of 80 means that a borrower is borrowing 80% of the value of the property and paying 20% as a down payment. For purchases, the value of the property is assumed to be the purchase price, for refinances the value is determined by an appraisal.

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

Lock Noun : The period, expressed in days, during which a lender will guarantee a rate. Some lenders will lock rates at the time of application while others will allow the borrower to lock the rate after the application is taken.

Lock Verb : The act of committing to a mortgage rate. This action, taken by a borrower some time between the application and the closing dates, is sometimes accompanied by a payment by the borrower to the lender.

Lock-in Clause : Clause in a loan agreement that states that the borrower cannot repay a loan prior to a specified date.

Long-Term Debt : Loans and financial obligations lasting over one year.

Margin : The amount a lender adds to the quoted index rate for an adjustable rate loan to determine the new interest rate.

Maturity : The "Due Date" of a loan.

Medical Debt : Debt incurred due to health care costs and expenses.

Merged Credit Report : A credit report that reports data from two or more major credit agencies.

Minimum Credit Rating : The minimum credit rating a borrower must have in order to qualify for a specific loan.

Minimum Payment : The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance.

Modification : Any change to the original terms of a mortgage, loan or other agreement.

Monthly Housing Expense : The total principal, interest, taxes and insurance paid by the borrower on a monthly basis. It is used with gross income to determine affordability.

Mortgage : A legal document that pledges property to a creditor for the repayment of the loan. It is the term used to describe the loan itself. Some states use the term First Trust Deeds to refer to mortgage loans.

Mortgage Banker : A financial intermediary that originates or funds mortgages, collects payments, inspects the property, and if necessary, forecloses on the propery. The main difference between a mortgage banker and a loan officer is a banker funds their own loans and sell them on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginny Mae.

Mortgage Broker : A mortgage company that originates loans, joining the borrower and lender for a real estate loan, thus earning a fee for placement.

Mortgage Constant : The factor used for rapid computation of the annual payment needed to amortize a loan.

Mortgage Insurance : Insurance that covers the lender against losses incurred as a result of a default on a home loan. This is usually required on all loans that have a loan-to-value higher than eighty percent. Mortgages that have an 80% LTV that do not require mortgage insurance have higher interest rates. The lenders then pay the mortgage insurance themselves. In addition, FHA loans and some first-time homebuyer programs require mortgage insurance regardless of the loan-to-value.

Mortgage Loan : Generally refer to a loan secured by residential property, often for the purpose of acquiring the residence. Mortgage loans may be lower priced than other forms of borrowing because the value of the property reduces risk for the lender.

Mortgage Refinance : A refinanced mortgage is one in which a borrower pays off an old loan with a new loan. People who refinance a mortgage usually do so to get a lower interest rate, lower their payments or to take cash out of their equity.

Mortgagee : The lender in a mortgage agreement.

Mortgagor : The borrower in a mortgage agreement.

Multidwelling Units : Real property that provide separate housing units for more than one family, although only a single mortgage is secured on the property.

National Debt : Money (or credit) owed by any level of government; either central government, federal government, municipal government or local government.

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

Net Debt : An accounting term which means, debt plus short term loans less cash on hand.

Net Effective Income : Gross income less federal income tax.

No Cash-Out Refinance : A refinance transaction that is not intended to put cash in the hand of the borrower, but instead calculates a new balance to cover the balance due on a current loan and any costs with obtaining a new mortgage.

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

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

No-Cost Loan : A loan that has no "lender costs" associated with it, or a loan that also covers purchases or refinancing costs, which may be incurred in buying a home, obtaining and/or refinancing a loan, but are not directly charged by the lender.

Nondischargeable Debt : A debt that cannot be discharged by filing for bankruptcy. It must be repayed in full.

Nonrecourse Debt : A secured loan that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender's recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance, the lender is simply out the difference.

Note : A legal document that obligates a borrower to repay a loan or mortgage at a stated interest rate during a specified period of time.

Note Rate : The stated interest rate on a loan or mortgage note.

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

Official Receiver : An officer of the court and civil servant, who deals with bankruptcies and compulsory company liquidations.

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

Open-end Credit : A line of credit that may be used repeatedly, including credit cards, overdraft credit accounts, and home equity lines.

Open-end Lease : A lease agreement in which the amount you owe at the end of the lease term is based on the difference between the residual value of the leased property and its realized value. The lease agreement may provide for a refund of any excess if the realized value is greateer than the residual value. In an open-end consumer lease, assuming you have met the use and wear standards, the residual value is considered unreasonable if it exceeds the realized value by more that three times the base monthly payment (sometimes call the "three-payment rule").

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

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

Owner Financing : Real or personal property purchase that is partly or wholly financed by the seller.

Owner's Title Policy : A policy protecting the buyer for the amount of the purchase price in the event of a future title dispute.

Package Mortgage : A mortgage that includes appliances and equipment located on the premises in addition to the real property itself.

Partial Entitlement : The amount of guarantee on a VA loan that is still available to an eligible veteran who has used his or hers previous entitlement.

Partial Payment : A payment that is not sufficient enough to cover the payment due. A borrower may make a request to make partial payments on the loan, especailly during times of economic hardship.

Participation Financing : A loan in which more than one mortgagee or mortgagor harbors an interest. It can also be a loan in which the mortgagee receives partial ownership of the property being financed.

Passive Income : income from business or investments that you do not have to work in on a day to day basis.

Payday Loan : A loan where a borrower gets cash advanced based on his paycheck. These loans generally up are up $500 and must be repaid on the next payday.

Payment : The amount that you are required to put toward what you owe, which is considered your monthly payment, or other time period as specified in the terms of agreement.

Payment Schedule : The method for disclosing your payment schedule varies by loan type. For fixed-rate loans, the payment schedule indicates what your required monthly payment will be throughout the life of your loan. The payment schedule for VA, FHA, one-time MIP and uninsured conventional loans should also indicate a fixed monthly payment. The payment schedule for fixed-rate insured loans may gradually decrease over time due to a declining insurance premium. For adjustable rate loans, the payment schedules will vary by loan type and are based on conservative assumptions of future interest rates.

Payment Change Date : The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM) or a graduated payment mortgage (GPM). The payment change date occurs the month immediately after the interest rate adjustment date.

Per Capita Debt : The total bonded debt of a municipality divided by the population of the municipality.

Periodic Payment Cap : The limit on the amount that payments can increase or decrease during any one adjustment period for an adjustable-rate mortgage (ARM) where the interest rate and principal fluctuate independently of one another.

Periodic Rate Cap : The limit on the amount that payments can increase or decrease during any one adjustment period in an ARM (adjustable rate mortgage), regardless of how high or low the index fluctuates.

Personal Cards : A personal credit card is used for your own use to make purchases that are needed for various reasons. This is different from a business card, which makes purchases that support or benefit a business operation.

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

Personal Property : Essentially, any property that does not fit the definition of realty, or real property.

Petition : A formal application made to a court.

PITI : Stands for principal, interest, taxes, and insurance. An "impounded" loan means that the monthly payment covers all of these, and perhaps mortgage insurance, if the loan calls for it. If one does not have an "impounded" account, then the lender still calculates these amounts separately and uses it as part of determining one's debt-to-income ratio.

PITI Reserves : A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The PITI (principal, interest, taxes, and insurance) must equal the amount that the borrower would have to pay for PITI for a determined number of months.

Plan : A debtor's detailed report on how he plans to pay the creditors over a period of time.

Planned Unit Development (PUD) : A type of ownership where individuals actually own the building or unit they reside in, but shared areas are owned jointly with the other members of the development or established association.

Plastic : A slang term for a credit card.

Pledge Account Mortgage (PAM) : Combines GPM (graduated payment mortgage) with a subsidizing savings account to provide the borrower with a low payment plan, the lender with amortizing payments and the seller with cash.

Points : Fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing. In some cases, the money needed to pay points can by borrowed, but doing so will increase the loan amount and the total costs. An origination fee covers the lender's work in preparing your mortgage loan.

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

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

Pre-Approval : A term used to mean that a borrower has completed a loan application and provided debt, income, and savings information that has been reviewed and pre-approved by an underwriter. Also, credit card companies often send out pre-approval notices to solicite new members, but in reality, issuance of the credit card may not be guaranteed.

Pre-Foreclosure Sale : A procedure in which a borrower is allowed to sell his or her property for an amount less than what is owed on it to avoid foreclosure, fully satisfying the borrower's debt.

Pre-Paids : Expenses such as taxes, insurance, and assessments, which are paid in advance of their due date, and on a prorated basis at closing.

Pre-QualificationTERM : After a loan officer has made inquiries about a borrower's debt, income, and savings, he or she can write a written statement (pre-qualification) about the borrower's chances for qualifying for a home loan.

Preferential Creditor : A creditor who is entitled to receive certain payments in priority to floating charge holders and other unsecured creditors. These creditors include occupational pension schemes and employees.

Preferred Debt : Debt that takes precedence over other debts.

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

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

Prepaid Interest : Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

Prepayment : Full or partial repayment of the principal before the contractual due date.

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

Prepayment Premium: : Money charged for an early repayment of debt. Prepayment premiums are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.

Prepaid Expenses : Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

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

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

Private Debt : Money owed by individuals and business within a country.

Private Mortgage Insurance (PMI) : PMI is typically charged to the borrower when the Loan-to-Value Ratio is greater than 80%. It is paid by a borrower to protect the lender in case of default.

Pro-Rata : This means "in proportion to."

Promissory Note : A written promise to repay a loan or specified amount of money over a specified period of time.

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

Prorations : The allocation of charges and credits to the appropriate parties at a real estate sale and/or loan closing at a real-estate sale and/or loan closing.

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

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

Proxy : Instead of attending a meeting, a person can appoint someone to go and vote in their place - a 'proxy'.

Proxy Form : Form that must be completed if a creditor wishes someone else to represent him or her at a creditors' meeting and vote on his or her behalf.

Public Debt : Money (or credit) owed by any level of government; either central government, federal government, municipal government or local government.

Purchase Agreement : A written contract signed by the buyer and seller stating the terms and conditions under which a particular property will be sold.

Purchase-Money Mortgage : Mortgage given by a borrower to the seller as part of the purchase price of the property.

Purchase-Money Transaction : The acquisition of property through the payment of money or its equivalent.

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

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

Quitclaim Deed : A deed that transfers, without warranty, whatever interest or title a grantor may have at the time the conveyance is made.

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

Rate Lock : A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.

Real Estate or Real Property : A portion of the earth's surface extending downward to the center to the earth and upward into space, including all things permanently attached thereto by nature or man and all legal rights therein.

Real Estate Agent : A person licensed to negotiate and transact the sale of real estate.

Real Estate Settlement Procedures Act (RESPA) : An act requiring the revelation of all costs involved in a real estate closing to all participants.

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

Realized Value : The price the lessor or assignee receives for the leased item at disposition, (2) the highest offer for the leased item at disposition, or (3) the fair market value of the leased item at termination. The realized value may be either the wholesale or the retail value as specified n the lease agreement.

Realtor : A real estate agent, broker, or associate that holds an active membership in a local real estate board that is affiliated with the National Association of Realtors.

Recast : To redesign an existing loan balance into a new loan for the same period or longer, to reduce payments and help a distressed borrower.

Receiver : The commonly used name for an administrative receiver. The term can also mean a person appointed by the court or with the power to receive the rents and profits of property. Receivers who are not administrative receivers do not need to be insolvency practitioners.

Reconciliation : Determining the final estimate of value by weighing the results of the various approaches in an appraisal.

Reconveyance Clause : The clause in a trust deed that gives the title back to the borrower when the loan is paid in full.

Recording : The formal filing of documents affecting a property's title.

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

Renegotiable Rate : A type of variable rate involving a renewable short- term "balloon" note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortized, periodic refinancing may be necessary.

Release : The process by which the Official Receiver or an insolvency practitioner is discharged from the liabilities of office as trustee/liquidator or administrator.

Rent-Loss Insurance : Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty, resulting in the tenant being excused from paying rent.

Repayment Plan : An agreement between a lender and a delinquent borrower regarding a mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making scheduled payments. Also, an agreement between a lender or credit card vendor and borrower to make payments in a specific amount and/or schedule, which is different than what the original agreement calls for.

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

Reschedule: : Revised timetable for loan repayments, usually granting longer repayment periods and often involving new loans to pay old ones.

Rescission : The cancellation of a contract.

Residual Qualifying : Under a VA loan, using specified housing expenses to qualify for a loan payment.

Residual Value : The end-of-term value of the item established at the beginning of the lease and used in calculating your base monthly payment. The residual value is deducted from the adjusted capitalized cost to determine the depreciation and any amortized amounts. It is an estimate that may be determined in part by using residual value guidebooks. The residual value may be higher or lower than the realized value at the scheduled end of the lease.

Restrictions : Rules imposed on the use of real estate in an effort to preserve property values.

Reverse Annuity Mortgage (RAM) : A system developed for an elderly property owner in which regular monthly payments can be received from a lender. When the total reaches a pre-determined amount, the owner begins repaying the loan or sells the property.

Revolving Debt : A credit arrangement that allows a customer to borrow against a pre-approved line of credit used to purchase goods and services. The borrower is responsible for the actual amount borrowed plus any interest due.

Right-of-First Refusal : A provision that states that a property to be first offered to a specific person before it can be offered for sale or lease to other parties.

Right to Off-Set : When you have fallen into arrears with payments to a credit card or loan and you also hold a current account with the same company, they can use the "Right to Off-Set" to take funds from your current account (without your permission!) to bring the debt back up-to-date.

Rollover Loan : A loan that includes a call date earlier than its normal amortization period.

Rule of 78 : Calculates proportionate amount of interest due on a loan being paid in full before its maturity.

Sale-Buyback : A financing arrangement in which an investor buys property from a developer and immediately sells it back under a long-term sales agreement, wherein the investor retains legal title.

Sale-Leaseback : A financing arrangement whereby an investor purchases real estate owned and used by a business corporation, then leases the property back to the business.

Satisfaction of Debt : The payment of debt.

Secondary Mortgage Market : A market where mortgage originators may sell them, freeing up funds for continued lending and distributes mortgage funds nationally from money-rich to money poor areas.

Second Mortgage : A mortgage that has a lien position subordinate to the first mortgage.

Secured Creditor : An individual or a business holding a claim against the debtor that is secured by collateral or a lien.

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

Secured Loan : A loan that is backed by collateral.

Security : Property pledged to the creditor in case of a default on a loan.

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

Security Interest : The creditor's right to take property or a portion of property offered as security.

Seller Carry-Back : An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

Seller's Points : A lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount.

Senior Debt : Debt that takes priority over other debt securities sold by the issuer.

Senior Loan : Real estate loan in first priority position.

Service Charge : A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Servicer : An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

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

Settlement Costs : Fees that are paid by the borrower when a property is purchased or refinanced. Also, fees paid to a debt settlement agency, upon the negotiated settlement of a debt

Short-Term Debt : Debt obligations requiring payment within the year.

Sign Up Fee : When a customer gets registered with a particular company to avail the required services, the company might end up charging a certain amount of money from the customer. This is known as sign up fee.

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

Sinking Fund : Monies deposited in advance in anticipation of satisfying a debt in the future.

Statement : The monthly bill from a credit card issuer that describes and summarizes the activity on an account. A statement includes the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month.

Statement Date : The date on which a statement is generated, and the month's finance charges (interest) are added to the balance.

Statutory Debt Llimit : The cap that Congress imposes on the amount of public debt that may be outstanding whether temporary or permane. When this limit is reached, the Treasury may not sell new debt issues until Congress raises the limit.

Stop Date : Date on a term loan when the balloon payment is due.

Straight Debt : Loan at a specific interest rate to be repaid over a set number of months.

Structured Debt : Debt that has been customized for the buyer, often by incorporating special options.

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

Subordinate Financing : Any mortgage or other lien that has a priority lower than that of the first mortgage, or senior loan. See second mortgage.

Subordinated Debt : A finance term to describe debt that is unsecured or has a lesser priority than that of an additional debt claim on the same asset. This means that if the party that issued the debt defaults on it, people holding subordinated debt get paid after the holders of the "senior debt". A subordinated debt therefore carries more risk than a normal debt.

Surcharge : An extra charge imposed on those who purchase with a credit card instead of cash. (Currently, surcharges for credit card purchases are prohibited.)

Surplus Income : This is the amount you are left with if you subtract all your living expenses (housing costs, food, travel, clothing insurances etc.) from your incomes (wages, pensions, benefits etc). This is the amount of "surplus income" available for the creditors.

Survey : A drawing or map the shows the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Sweat Equity : Increase in property value due to improvement by the owners.

Takeout Mortgage : A permanent mortgage, obtained by pre-arrangement between a builder and a financial institution, to repay the interim mortgagee at the completion of construction.

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

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

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

Third-Party Origination : A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

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

Title Company : A company that specializes in examining and insuring titles to real estate.

Title Insurance : Title Insurance policies typically insure a homebuyer against any title-search errors or mistakes, and against loss due to disputes over property ownership. Title Insurance can additionally offer protection to the lender under similar circumstances. The cost of title insurance is usually a set value per thousand of dollars of the total loan amount.

Title Search : A check of the title records to make sure that the seller is the actual legal owner of the property, and that there are no liens or other claims outstanding.

Token Payment : When you are unable to make repayments to your creditors, it may be necessary to make small "token payments" to each creditor. This may be as little as $1.00 each per month, but it is better to send this "token payment" than send nothing at all.

Total Debt-Assets : The ratio of long-term and current liabilities (debt that will be paid off within one year) to total assets.

Total Debt Ratio : Monthly debt and housing payments divided by gross monthly income. Also known as Back-End Ratio.

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

Trade Debt : Accounts payable.

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

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

Transfer of Ownership : The means by which the ownership of a property changes hands. Examples of such include the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchases, and any exchange of possession of the property under a land sales contract or any other land trust device.

Transfer Tax : State or local tax payable when the title passes from one owner to another.

Trustee : A court appointed official who acts as a liaison officer between the debtor and the creditor. His primary function is to act as a disbursement officer. He collects payments from the debtor and distributes the money amongst creditors. In some cases he may even help in valuing assets or creating repayment schedules.

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

Truth-in-Lending Law : Provision in the Truth-in-Lending Act that requires lenders to reveal the actual costs of borrowing.

Two-Step Mortgage : A loan where the interest rate is fixed for the first seven years and then is adjusted one time for the balance of the loan period.

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

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

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

Unsecured Claim : A debt secured by property that is worth less than the amount of debt.

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

VA Loan : A government-backed mortgage loan supported by the US Veterans Administration.

Variable Rate Mortgage : A mortgage in which the interest rate may be adjusted periodically based on an index.

Vested : Means that one has a right to use a portion of a fund, such as an individual's retirement fund.

Variable Rate : A variable rate agreement, as distinguished from a fixed rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.

Variable Rate Mortgage : A mortgage in which the interest rate is adjusted periodically based on an index. Also called a variable rate mortgage.

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

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

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

Winding-Up : When a business/company is terminated or made bankrupt, all company assets are sold off and the proceeds go to pay the creditors. Any remaining money is distributed between the shareholders.

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

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

Zero Percent Financing : A loan with no interest in the contract. The IRS may impute 10 percent for both borrower and lender.

Zoning : The right of a community, under its police power, to dictate the use of property within its boundaries.


A  |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  L  |  M
N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  Z

Index of Terms | Complete List of Terms


Get Out of Debt! — Call Right Now — 1800 DEBT.COM


 
Over 2,000 Pages of Content
Free Debt Consultation
Center For Debt Management

Center For Debt Management

The Center For Debt Management

Helping Consumers Save Money and Reduce Debt Is Our Only Business!

We invite you to explore the sectors listed below. We promise that you'll find exceptional values, offers and resources to reduce your living expenses and to enjoy life! But First—if you're over-your-head in debt—get a free no-obligation debt consultation right now!
 


Debt Management and Financial Services! The Internet's oldest and most comprehensive debt management agency! Resources for debt management, consumer credit counseling, debt consolidation loans, debt settlements, legal aid, financial aid, credit and financing, credit reports, budget software, insurance, income resources, tax assistance and more. Get out of Debt! Call Now — 1800DEBT.COM

Established In 1989 and Serving The Online Community Since 1992!

Get Out Of Debt: Call 1800Debt.com

Center For Debt Management