Financial Terms

The remaining amount credited to a customer’s account, representing the amount the customer is entitled to withdraw (see three types of deposit system balances below), or conversely, the remaining amount of a customer’s debt, which is the amount the customer is obligated to repay.

A financial statement that contains the types and amounts of assets, liabilities and net worth of a company, institution or individual – also called a statement of condition.

This loan has regular monthly payments, which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years.

The lump-sum payment of the unpaid principal remaining at the end of the term of a balloon mortgage loan or other non-amortizing loan.

A Federal Reserve Board regulation that requires all financial institutions to monitor and report transactions that involve the exchange of currency in amounts exceeding $10,000.

This is a proclamation by a court of an individual’s (or organization’s) state of insolvency, or inability to pay debts. The petition may be brought by an individual or his creditors, with a goal of orderly and equitable settlement of obligations.

One basis point equals 1/100th of 1%: .0001. For example, 50 basis points is .005. Basis points are frequently used to describe changes in yields of interest rates.

The legal owner of a piece of property.

A gift of personal property by will.

A payment plan under which one pays one-half of a monthly payment every two weeks, saving substantially over the life of the loan.

A document by which one transfers ownership of goods to another.

A mortgage covering at least two pieces of real estate, both of which serve as collateral for the loan.

In good faith.

A document representing a right to certain payments on underlying collateral.

Individual or institution receiving funds in the form of a loan and obligated to repay the loan, usually with interest. A borrower is called a mortgagor when the loan is secured by real estate.

A loan that “bridges” the gap between the purchase of a new home and the sale of the borrower’s current home. The borrower’s current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home’s first mortgage at the bridge loan’s closing, while others pile the new debt on top of the old. They usually run for a term of six months.

This individual assists in arranging funding or negotiating contracts for a client, but does not loan money himself.

The process includes trading money for a lower mortgage rate. The borrower “buys down” the interest rate on a mortgage by paying discount points up front. It can also be a mortgage in which an initial lump-sum payment is made to temporarily reduce a borrower’s monthly payments during the first few years of a mortgage.

An agent hired by a buyer to locate a property for purchase and to represent the buyer in negotiations with the seller’s broker for the best possible deal for the buyer.

Market conditions that favor buyers – with more sellers than buyers in the market, buyers have ample choice of properties and can negotiate lower prices.