A-Credit - The best credit rating that a consumer can have. This rating entitles you to the lowest prices that a lender offers. A-Credit is usually considered any FICO score greater than 720.

Abstract (Of Title) - A summary of the public records for a specific piece of land. You should review the abstract before purchasing a property to make sure that there aren't any stipulations that would make it less valuable.

Acceleration Clause - A provision in a mortgage that gives the holder the right to demand all of the outstanding balance immediately.

Accrued Interest - Interest that has been earned but not yet paid on a loan.

Acquisition Fee - Fee charged by the car leasing company, which may be paid up front or amortized into your car loan.

Adjustable Rate Mortgage (ARM) - A mortgage loan that has an interest rate that changes periodically based on economic indexes. The interest rate of an ARM loan is initially lower than a fixed rate loan.

Adjustment Interval - The time between changes in the interest rate of an ARM loan.

Agreement of Sale - A contract that defines the terms and conditions for which a property will be sold and is signed by both the buyer and seller.

Alienation Clause - A provision in a mortgage document that states that a loan needs to be paid, in full, if ownership of the property is transferred.

Amortization - The repayment of a loan through periodic installments over a fixed period of time.

Annual Percentage Rate (APR) - The percentage rate that providers charge users for carrying a balance on a loan, which is measured as a yearly rate. Some credit card providers offer 0 APR credit cards.

Application Fee - The fee that some lenders charge in order to accept an application.

Appraisal - An expert estimate of the value of a particular property.

Appraised Value - An estimate of the value of a property that is assigned by a licensed professional and assesses the fair market value of a property.

Approval Letter - A lender's written acceptance of a loan application.

Assessed Value - The valuation of a property made by a public tax assessor for tax purposes.

Asset - Cash or personal property that can be sold.

Assumable Mortgage - A mortgage that can be taken over by a buyer.

Assumption - The transfer of a mortgage from an existing homeowner to a buyer.

Bad Credit - A term for a low credit rating. Your credit rating can be damaged by making late payments, missing payments, or declaring bankruptcy.

Balance/Amount Owed - The amount that you owe a lender. This includes: charges, cash advances, fees.

Balloon Payment - A large payment at the end of lease or a loan.

Bankruptcy - A legal process to declare an inability to pay off all debts. Declaring bankruptcy will eliminate all credit card debt, but will also seriously damage your credit rating and will remain on your credit for at least 10 years. Federal student loans, Federal taxes and child support are exempt from Bankruptcy protection. There are two types of Bankruptcy: Chapter 7 and Chapter 13.

Bill Collectors - Agencies that are contracted by lenders to collect on the value of a loan.

Bill Consolidation - When you take out a single loan, possibly at a lower interest rate, to pay off multiple debts.

Billing Cycle - The period of time between your loan payment and your next loan payment.

Biweekly Mortgage - A mortgage where the borrower pays half the monthly payment every 2 weeks.

Blanket Mortgage - A mortgage that covers more than 1 piece of real estate.

Borrower - A person who applies and receives a loan from a lender with obligation to repay the loan in full.

Bridge Loan - A loan to fund a buyer's new residence until the buyer receives money from the sale of his/her existing residence.

Broker - A professional that represents a buyer and/or seller and assists in negotiating the contract.

Budget - The list of items that you spend money on and the amount of money that you earn. This list is organized in a systematic way in order to ensure that money is properly allocated for a given time period.

Buydown - A payment made to a lender in order to reduce the interest rate of a loan.

Buyer's Market - An economic market where conditions are in favor of the buyer.

Call Option - A provision allowing the lender to require payment of the loan before the end of the loan term.

Cap - A provision of an ARM that limits how much the interest rate or mortgage payments can increase.

Capital Gains - The profits earned from the sale of real estate.

Cash Out - The cash a borrower receives in addition to the remaining balance of a new loan.

Certificate of Eligibility - The document issued by the U.S. Department of Veterans Affairs used by veterans when applying for a VA loan.

Certificate of Occupancy - A certificate issued by a local government agency to document that a house passes all building occupancy standards.

Certificate of Title - A written, but not protected, statement by an attorney or title company that defines the status of title to a property.

Chapter 13 Bankruptcy - A type of bankruptcy where the filer follows a debt repayment plan and assets are not sold.

Chapter 7 Bankruptcy - A type of bankruptcy where the filer’s assets are sold by a court appointee to pay all debts.

Clear Title - Where the title of ownership for property or an item doesn't have any liens or legal issues regarding ownership.

Closing - The process of transferring ownership from the seller to the buyer.

Closing Costs - The costs associated with transferring ownership of property (credit reports, surveys, attorney fees, etc.).

Co-Borrowers - When 2 or more borrowers take out and repay a loan.

Co-sign - Where one person signs a loan application, such as a credit card application, with another person and agrees to assume the debt if the other person doesn’t pay.

Collateral - An asset that you put up as a guarantee for loan repayment.

Collection - The process of giving unpaid bills to an organization that specializes in recovering unpaid loans.

Compounding - A type of interest that is applied to both the starting amount and the amount of interest that has been applied. Since compounding interest applies to the amount and the interest, interest payments to unpaid debt will grow over time.

Consolidate Debt - See Debt Consolidation.

Consumer Credit Counseling Service (CCCS) - A not-for-profit organization that provides financial counselors and will help negotiate with creditors.

Consumer Reporting Agency - A company that provides information to credit providers to assist in the decision to extend credit.

Contingency - The legally binding conditions put on an offer to buy a property.

Conventional Mortgage - A mortgage loan that is not insured or guaranteed by the Federal government.

Convertible ARM - An Adjustable Rate Mortgage that has the option to be changed to a Fixed Rate Mortgage under stated stipulations.

Conveyance - The document used to transfer the title of property between two parties.

Covenant - A stipulation set in a written agreement that, if broken, can result in foreclosure.

Credit - The amount of money a lender, such as a credit card provider, agrees to lend the person applying for a loan.

Credit Bureau - A company that produces a credit score based on your financial information. If a credit card provider denies your credit card application, they must tell you which Credit Bureau provided the credit score. You also have a right to request one free credit score per year from a Credit Bureau.

Credit Criteria - The information a lender, such as a credit card provider or mortgage company, uses when deciding whether or not to approve a loan application. This information includes: income, debt, number of credit cards, credit score, etc.

Credit History - Information about a person's financial activities over time. Loan providers review this information before deciding whether or not to approve a loan application. This information includes: income, debt, number of credit cards, credit score, etc.

Credit Line - See Line of Credit

Credit Report - A report on a person's credit history based on the information that each credit bureau has assembled on that person's finances over the last 7-10 years.

Credit Score - A score that is based on a person's credit history, debt, type of credit, number of bankruptcies, as well as many other factors. The most commonly used credit score is called the FICO score, which was developed by Fair Isaac Co.

Daily Periodic Rate - The interest rate used to determine daily interest fees. This rate is based on the yearly rate, divided by the number of days in the year.

Debt Consolidation - The process of merging several debts into 1 payment, which generally have lower monthly payments and extend over a longer period of time. For example, you can make a balance transfer between credit cards or get a Home Equity Loan to eliminate credit card debt.

Debt Elimination - See Debt Consolidation.

Debt to Income - Your monthly debt multiplied by 12 months and divided by your annual income. For example, if you earned $100,000 a year and have a monthly debt of $1000, you would have a DTI of 12%. This value is a type of credit criteria used by credit card providers and mortgage lenders when evaluating your application.

Deed - A legal document that conveys title to a property.

Deed of Trust - The document used in some states instead of a mortgage to transfer property to a trustee rather than a borrower.

Default - When a borrower doesn’t make a loan payment according to the terms defined in the loan agreement.

Deferment - See deferred payment

Deferred Payment - The process of putting off payment of a debt until a later time. For example, deferring payment of a student loan until you’ve graduated.

Delinquency - A debt on which payment is overdue based on the loan terms and conditions.

Demand Clause - A clause allowing the lender to demand repayment at any time for any reason.

Depreciation - The amount that an item, such as a car, or real estate can go down in value over time. Typically causes for real estate depreciation are wear and tear on the property or a change in the neighborhood.

Disclosure Statement - A required statement that lists the actual costs of a loan.

Discount Points - An initial fee paid to the lender to lower the interest rate on a loan

Discretionary ARM - An ARM mortgage where the lender has the right to change the interest rate with advance notice.

Down Payment - The difference between the price of a home and the loan amount.

Due Date - The day that your payment must be received by your lender. If a payment is received after that date, a late fee may be charged.

Due-on-Sale Clause - A clause stating that the remainder of the loan is due on the sale of the property.

Earnest Money - A deposit (a portion of the down payment) that is given by the prospective buyer to show serious interest in purchasing the home.

Encroachment - A construction of a neighboring property that crosses over the legal boundary of a property.

Encumbrance - A legal issue attached to a property that devalues a property. An encumbrance can be in the form of a claim, lien, charge, zoning ordinance or any other legal action that would devalue a home.

Equal Credit Opportunity Act - A Federal law prohibiting lenders and creditors from discriminating against a loan request based on race, color, religion, national origin, age, sex, marital status or income from public assistance programs.

Escrow - The holding of documents and money by a neutral 3rd party for the seller and buyer.

First Mortgage - The loan on a property that takes priority over all other loans on the property.

Fixed Expenses - Expenses that are paid each month and that remain the same, such as mortgage, school tuition, car insurance, etc.

Fixed Rate Mortgage - A mortgage where the interest rate doesn’t change over the life of the loan.

Float - The process that allows the rate to change with market conditions.

Flood Insurance - The insurance that protects property against damage caused by flooding.

Forbearance - A method of putting off loan payments, such as for a credit card, for 6 month to a year, based on financial hardship. You can renew forbearance on a yearly basis for a maximum of three years.

Foreclosure - A legal word meaning that a lender acquires possession of a property when a mortgage is in default.

Free Credit Report - Your right, under Federal law, to request a credit report from each of the three credit bureaus once a year.

Fair Credit and Charge Card Disclosure Act - The Federal Act that defines your rights to access your own financial information.

Fair Credit Billing Act - The Federal Act that states that you have a right to find and fix billing errors within 60 days.

Fair Credit Reporting Act (FCRA) - The Federal Act that states that you have a right to check and correct errors on your credit report as well as verify that your credit history isn’t being misused.

Fair Debt Collection Practices Act - The Federal Law that states that you are protected from unfair treatment by debt collectors.

Federal Housing Administration (FHA) - A Federal agency that is a part of the Department of Housing and Urban Development, which provides mortgage insurance to private lenders.

Federal Reserve - The centralized United States bank, which sets interest rates and manages the flow of cash to local and regional banks, and helps to guarantee the security of the U.S. banking system.

Fee Simple - The complete and absolute ownership of property where the owners have powers to do anything with the property.

FHA Mortgage - A mortgage that is insured by the Federal Housing Administration (FHA). Interest rates are generally equal to market rates and down payment requirements are generally normal.

FICO Score - The most common credit score model, also known as a Fair Isaac score. A FICO score ranges from 200 to 900 and a higher score makes a person a more reliable borrower.

Finance Charges - The fees charged by a lender related to a credit card or line of credit.

Financing - A way to raise funds or capital for buying a new car, getting a mortgage on a house, or making purchases on a credit card.

Garnished Wages - Where a borrower’s paychecks are held by court order and part of that paycheck goes to another individual or company to repay a debt or financial obligation.

Good Faith Estimate - An estimate of the charges a borrower is likely to pay as a result of a settlement.

Government National Mortgage Association - A government corporation within the U.S. Department of Housing and Urban Development that helps finance government-assisted housing programs.

Grace Period - The period of time after the due date of a loan payment in which payment can be made without a late penalty.

Graduated Payment Mortgage (GPM) - A mortgage loan that starts with lower monthly payments and increases over time at a designated rate.

Guaranteed Loan - When a lender offers a loan with the understanding that the loan is guaranteed to be repaid by another party if the borrower defaults.

Hazard Insurance - Insurance that protects property against damage caused by fire, windstorm, vandalism or other common hazards.

Home Equity Line of Credit - A line of credit that a borrower can draw from, which based on the price of a mortgage.

Home Equity Loan - A "Second Mortgage," it is a loan secured by the value of a primary house.

Homeowner's Insurance - A combination of liability coverage and hazard insurance which protects your home against theft and damage. All lenders require this insurance.

Household Income - The total income made by all individuals in a household. This includes: salaries, bonuses, child support, social security, unemployment, etc.

Housing and Urban Development (HUD) - A government agency that oversees the Federal Housing Administration and was established to implement federal housing and community development programs.

HUD-1 Form - A form received by the borrower that states all the details regarding payments and receipts in a real estate transaction.

Impound - A part of the borrower's monthly payments that is held by the lender to pay for taxes, insurance, lease payments and other housing payments that are due.

Index - An interest rate that is not controlled by the lender and is used in an Adjustable Rate Mortgage (ARM).

Inflation - The increase in prices for goods and services over time.

Installment Loan - A loan that is repaid in a series of payments rather than in one large sum. A home mortgage or home equity loan is an example of an installment loan.

Interest - Price paid for borrowing money.

Interest Rate - The percentage rate that a loan provider, such as a credit card provider, charges against the principal amount of money that the company loaned the borrower.

Interest Rate Cap - A limit on the amount to which an interest rate can change on an Adjustable Rate Mortgage (ARM).

Joint Liability - Liability shared by two or more people. Each person is liable for the full debt.

Joint Tenancy - Ownership of a property by two or more persons. The interest payments are equal and each party has equal rights regarding the property.

Jumbo Loan - A loan that is larger than the limit that is set by Fannie Mae and Freddie Mac.

Junior Mortgage - A secondary mortgage that is required to be paid only after the senior mortgage in the case of a foreclosure.

Late Charge - A penalty that is paid by the borrower when a payment is made after the due date.

Late Fee - The fee charged for the late payment of a bill.

Late Payment - The payment on a bill that is made after the due date.

Late Payment Fee - The fee charged for the late payment of a bill.

Lender - The party that offers a loan.

Liability - A person's legal responsibility to repay a loan

Lien - A legal claim against a property that must be paid before the property is sold.

Lifetime Cap - A provision to an Adjustable Rate Mortgage (ARM) that states the maximum that a loan’s interest rate can increase over the life of a loan.

Line of credit - The amount of money you can draw from a credit account, such as a credit card or equity mortgage.

Loan Application - An request containing the information required to apply for a loan.

Loan-to-Value Ratio (LTV) - The percentage of the total value of the property that is mortgaged.

Lock - An option that can be exercised by the borrower that guarantees a specific interest rate over a period of time.

Margin - The set percentage that the lender adds to the index rate to establish the interest rate of an Adjustable Rate Mortgage.

Maturity - The due date on which the final point of a loan must be paid.

Minimum Payment - The least amount of money that you must pay to your credit card provider by the statement’s due date.

Monthly Payment - The amount of money paid on a lease or loan each month.

Mortgage - A legal document that is held by a lender as security for repayment of a loan to purchase real estate.

Mortgage Broker - A company that matches borrowers and lenders together for a fee.

Mortgage Insurance - The insurance that a mortgage lender takes out to protect against the possibility of a borrower defaulting on a loan.

Mortgage Insurance Premium - The fee that a borrower pays to a lender for mortgage insurance. This premium can be in the form of an up-front fee, monthly and/or annual payments.

Mortgagee - The lender in a mortgage agreement.

Mortgagor - The borrower in a mortgage agreement.

Mutual Fund - A type of investment where the investment is spread across a variety of types of securities and is managed by professionals.

National Foundation for Consumer Credit (NFCC) - A not-for-profit organization that provides credit advice to consumers.

Negative Amortization - A loan payment where the outstanding balance of a loan goes up instead of down because the mortgage payments do not cover the amount of interest due.

Non-taxable Income - Income that you cannot be taxed for by any branch of the government.

Note - A document that serves as evidence to a debt and promise to repay.

Notice of Default - A written formal notice to a borrower that a default has occurred and that legal action may be taken.

Origination Fee - A fee that is paid to a lender to cover administrative costs of processing a loan application.

Payment Cap - A provision of an Adjustable Rate Mortgage that limits how much a borrower's payments can increase.

Periodic Rate - The interest rate for a specified period of time.

PITI - Principal, Interest, Taxes and Insurance. These are the 4 components that make up a monthly mortgage payment.

Planned Unit Development (PUD) - A project that is owned and maintained by a homeowner's association for the benefit of all of the individual units.

Points - A one-time charge paid by the borrower to decrease the interest rate of the loan. One point corresponds to 1% of the mortgage loan amount.

Postdated check - A check that is dated after the current date.

Posting Date - The date that a dollar amount is charged against your loan, such as credit card or mortgage.

Power of Attorney - A legal document that grants authority to a person to act on the behalf of another.

Pre-approval - A commitment by a lender to provide a mortgage loan to a specified borrower. This approval is subject to verification at application.

Pre-qualification - The process of determining how much money a prospective homebuyer is eligible for before applying for a loan.

Prepayment - The total payment of a loan before loan is due.

Prepayment Penalty - A fee that is charged to a borrower by the lender for paying off a loan early.

Prime Rate - The interest rates that banks charge to other banks or large corporate borrowers. Banks set their own prime rate and is often used as a basis for determining variable interest rates for loans such as credit cards or mortgages.

Principal - The amount of the actual loan not including the amount of interest.

Processing - The process of preparing the loan application and documentation for consideration by the lender.

Promissory Note - A legal document to get a loan, which defines a person's rights and responsibilities for that loan.

Purchase Agreement - A contract signed by the buyer and seller that indicates the conditions under which an item or property will be sold.

Purchase Contract - An agreement between the buyer and seller that indicate the prices and terms of the sale of the property or item.

Qualifying Ratio - The ratio of fixed monthly expenses to monthly income. This ratio is used by lenders to determine how much to loan to a homebuyer.

Rate Lock - An agreement that guarantees the interest rate of loan for a set period of time.

Real Estate Settlement Procedures Act (RESPA) - A Federal law that requires lenders to give notice of closing costs to the borrower.

Real Property - Land and any improvements that are permanently attached to it.

Refinancing - Paying of one loan with the proceeds from a separate loan that is secured by the same property.

Reverse Mortgage - A tool that an elderly homeowner uses to convert the equity of their home into cash. No payments are made on a reverse mortgage until the borrower dies or moves out.

Revolving Credit - A type of credit agreement where as you pay the amount, the credit becomes available; for example, a credit card or home equity loan.

Second Mortgage - A mortgage that is in addition to the first mortgage. It is secured by the value of the primary home and includes home equity loans, credit lines, and home improvement loans.

Secondary Mortgage Market - A market where mortgages are bought and sold.

Secured Debt - A debt that is guaranteed by property that is equal to or more than the amount of the loan.

Secured loan - A loan where you pledge collateral that must be given to the lender if you fail to repay the loan.

Security - A financial tool that serves as a pledge to payment of a debt.

Security Deposit - A payment made prior to entering an auto lease that is, usually, equal to one month's payment as security against excess wear and tear on your car.

Seller's Market - An economic market where conditions are in favor of the seller.

Settlement Costs - Also known as "closing costs," costs that most be paid by the borrower at the time of closing.

Shared Appreciation Mortgage - A loan where the borrower receives a lower interest rate and the lender receives a portion of the appreciation in the value of the property.

Sub-prime Loan - A loan in which the borrower faces challenges in financing because of poor credit or any situation that would cause them difficulty in obtaining funds from lenders.

Survey - A drawing indicating the legal boundary lines of a property.

Tenancy in Common - The joint ownership in a property where the persons do not have right of survivorship and interest payments don't need to be equal.

Term - The time period for which a loan must be repaid.

Title - The right of ownership and possession of a specific property.

Title Company - A company that insures title to property.

Title Insurance - The insurance that protects the lender or buyer against losses relating to disputes over ownership of a property.

Title Search - A search that checks that the seller is the legal owner of a property and that there aren't any liens or other claims outstanding on the property.

Total Expense Ratio - The ratio of total housing expenses to borrower income.

Transaction Date - The date that you made a purchase or got cash from your credit card. Some credit card providers charge your account from the date you make a purchase and others charge on a periodic cycle.

Transaction Fee - A fee charged for certain types of activities, such as getting a Cash Advance on your credit card, or a fee associated with getting a refinance mortgage.

Transfer Tax - The tax paid when a title passes from one owner to another.

Trustee - A party that is given legal responsibility to hold an item, property or money in the interest of another.

Truth in Lending Act (TIL) - A law that states that certain information must be provided to the borrower upon receiving an estimate for the costs of a loan.

Underwriting - The process of evaluating a loan application to determine what risks are involved for the lender.

Unsecured Debt - A loan that is not guaranteed.

VA Loan - A mortgage loan for veterans that is guaranteed by the Department of Veterans Affairs. This type of loan has low to no down payments.

Variable Expenses - The expenses that change on a monthly basis. These expenses can include: food, utilities, credit card purchase, etc.

Variable Interest Rate - An interest rate that changes periodically based on the Prime Rate.

Wear and tear - The normal damage done to a vehicle over its lifetime.

Wrap-around Mortgage - A mortgage on a property that already has a mortgage. The new lender assumes responsibility for payment obligations on the old mortgage.

Zoning Ordinance - The local government laws that establish building codes detailing regulations for use of one's property.