Financial Dictionary

Consumer Credit Management Services is proud to present a comprehensive list of financial terms. Simply use the letter menu bellow to go to the word you are looking for.

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

A

1 year adjustable (ARM):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 10, 2, 3, 5 and 7 year of adjustable (ARM).

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.

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.

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 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.

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.

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.

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.

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.

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B

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.

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.

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.

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

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

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.

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.

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.

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.

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C

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.

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.

Collateral: This is a piece of property or asset 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.

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 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 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 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 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 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.

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 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.

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D

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.

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

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.

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.

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

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

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.

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.

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E

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: 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.

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 most renowned and remarkable amongst 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.

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.

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.

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F

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

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.

Fee Simple: A fee without limitation to any class of heirs; they can sell it or give it away. The total or absolute ownership of real property.

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.

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.

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

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

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.

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.

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.

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G

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 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.

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.

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

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H

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 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.

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I

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.

Introductory interest rates: In order to give you an attractive deal many companies waive off or lower your introductory interest rates. However after a period of time these low rates might change and you might have to pay high rates like other companies charge you. The only positive side to it is that, you might be offered a low interest rate in your balance transfer and save some money in the interest which you are paying.

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.

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

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 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.

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J

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

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K

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L

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

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

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

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

Liability: This means you are completely responsible for any financial transaction done through a card of which you are in charge of. 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.

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.

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

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

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

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 you against increased rate during that time.

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M

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N

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.

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.

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.

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O

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.

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.

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

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P

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.

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.

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.

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.

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.

Payments: Every month you are required to put money towards what you owe which is considered your monthly payment.

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.
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.

Plastic: A slang term for a credit card.

Premium 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.

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.

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.

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Q

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

Quality Ratios: This means 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

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R

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.

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.

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

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.

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S

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.

Security: This is same as collateral which is given as a supportive materialistic assurance, (equivalent to the present loan amount) to creditor in case a borrower fails to repay a loan amount. The creditor in that case can sell of this additional property to retrieve his money.

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

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.

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.

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. However, now most of the companies do not charge the customers anything as sign up fees.

Student 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.

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T

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.

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 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.

Trustee: A person (or institution) who has legal rights and responsibilities to a property and is entrusted to use it for another’s benefit.

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.

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U

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 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.

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V

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.

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W

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

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.

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.

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X

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Z

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