Making Sense of Dollars and Cents.
It's hard to make sense of the difference between APR and APY. Below is a simple guide to some common financial terms.
The person or institution funds are paid to.
The person or institution issuing the funds.
Pledged funds are those that are designated to be used for a specific purpose, such as securing a loan, also known as collateral.
The best borrowing rate charged to its most credit worthy customers by US banks.
The original or initial amount of money invested or borrowed.
Private Mortgage Insurance (PMI)
Protects the lender against loss if the homebuyer defaults on the loan. Usually required for first mortgage loans where the down payment is less than 20% of the sales price--or in a mortgage refinance where the amount financed is greater than 80% of the appraised value of the property.
A percentage a borrower is willing to pay to receive funds.
A written agreement guaranteeing a mortgage applicant a specific interest rate on a home loan provided the loan is closed within a specified time frame.
To get new financing for a home or car to lower the rate and/or extend the term to reduce the payment, or to borrow additional funds. In the process, the old lender is paid off by the new one.
When a lender takes possession of property due to the borrower's failure to pay the loan installments due or otherwise causes the loan to be in default. A lender may repossess a vehicle or other property securing a loan.
An all-encompassing financial plan to assist members saving for retirement.
The uncertainty that an investment will earn an expected rate of return, or that a loss may occur.
In Credit Unions a share is the amount a member has on deposit representing ownership in the credit union.