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  • Account Agreement

    The contract governing your open-end credit account, which provides information on changes that may occur to the account.

  • Account History

    The payment history of an account over a specific period, including the number of times the account was past due or over limit.

  • Account Holder

    Any and all persons designated and authorized with the bank to transact business on behalf of an account.

  • Accrued Interest

    Interest that has been earned but not yet paid.

  • Adjustable-Rate Mortgage (ARM)

    Also known as a variable-rate mortgage. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change. These changes will affect the payment amount.

  • Adjustment Date

    The date that the interest rate changes on an adjustable-rate mortgage (ARM).

  • Adjustment Period

    The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).

  • Affordability Analysis

    An analysis of a buyer's ability to afford the purchase of a home. It reviews income, liabilities and available funds, and takes into consideration the type of mortgage you plan to use, the area where you want to purchase a home and the likely closing costs.

  • Amortization

    The process of reducing debt through regular installment payments of principal and interest that result in the payoff of a loan at maturity.

  • Amortization Term

    The length of time required to amortize the mortgage loan expressed in months. For example, 360 months is the amortization term for a 30-year fixed-rate mortgage.

  • Annual Percentage Rate (APR)

    The cost of credit on a yearly basis, expressed as a percentage.

  • Annual Percentage Yield (APY)

    A percentage rate reflecting the total amount of interest paid on a deposit account. This is based on the interest rate and the frequency of compounding for a 365-day year.

  • Appraisal

    A written analysis prepared by a qualified appraiser to estimate the value of a property.

  • Appraised Value

    An opinion of a property's fair market value, based on an appraiser's knowledge, experience and analysis of the property.

  • Asset

    Anything owned by a person or a business that has monetary value, including land, a dwelling or personal property.

  • Assignment

    The method of transferring a right or contract from one person to another.

  • Assumable Mortgage

    When an outstanding mortgage and its terms are transferred from the current owner to a buyer. This generally requires a credit review of the new borrower, and lenders may charge a fee for the assumption. If a mortgage contains a due-on-sale clause, it may not be assumed by a new buyer.

  • Assumption Fee

    The fee paid to a lender (usually by the purchaser) when an assumption takes place.

  • Automated Clearing House (ACH)

    A computerized facility used by member depository institutions to electronically combine, sort and distribute inter-bank credits and debits.

  • Automated Teller Machine (ATM)

    This machine allows you to deposit and withdraw cash anytime without needing to visit a bank during business hours.

  • Availability Date

    This refers to when funds deposited into an account will be available for withdrawal.

  • Availability Policy

    This is a bank's policy as to when funds deposited into an account will be available for withdrawal.

  • Available Balance

    The account balance, minus any funds preauthorized or held (such as outstanding debit card transactions or deposited check holds). Pending ACH transactions are not included in the available balance.

  • Balance Sheet

    A financial statement that shows assets, liabilities and net worth as of a specific date.

  • Balloon Mortgage

    A loan that provides you with lower-than-usual monthly payments for a set period of time followed by a payment larger than usual at the end of your loan repayment period. While a balloon loan may lower your monthly payments, it can also mean you make higher interest payments over the life of the loan.

  • Balloon Payment

    A large lump-sum payment due at the end of the loan term to repay the remainder of the principal.

  • Bank Statement

    A customer statement that shows all deposits made, all checks paid and other debits posted during the period (usually one month), as well as the current balance.

  • Before-Tax Income

    Income before taxes are deducted.

  • Beneficiary

    A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity or other contract.

  • Biweekly Payment Mortgage

    The 26 (sometimes 27) biweekly payments that are equal to one-half of the monthly payment required if the loan were a standard 30-year fixed-rate mortgage. The result for the borrower is a substantial savings in interest.

  • Bridge Loan

    A short-term loan option usually used to help the borrower buy a new property before their current home is sold.

  • Business Day

    Any day on which offices of a bank are open to the public for carrying on the bank's business.

  • Buydown

    When the seller, builder or buyer pays an amount of money up front to the lender to reduce monthly payments during the first few years of a mortgage. Buydowns can occur in both fixed- and adjustable-rate mortgages.

  • Canceled Check

    A check that has been cleared by the bank it was pulled from, never to be used again after it has been deposited or cashed.

  • Cap

    A ceiling rate for the maximum interest rate that can be charged on a variable-rate loan or adjustable-rate mortgage (ARM).

  • Capital Ratio

    Capital ratio compares a financial institution’s funds with the amount of risk it has taken on, in an effort to measure financial health and the ability to withstand unexpected losses. It’s calculated by dividing current assets by current liabilities.

  • Certificate of Deposit (CD)

    A savings tool from a bank or credit union that has a fixed maturity date and a fixed interest rate.

  • Certificate of Eligibility

    A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) mortgage.

  • Certificate of Reasonable Value (CRV)

    A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.

  • Certified Check

    A check for which the bank verifies enough money is in the respective account to cover it.

  • Change Frequency

    The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).

  • Check

    A written order instructing a financial institution to pay immediately on demand a specified amount of money from the check writer's account to the person named on the check.

  • Checking Account

    A demand-deposit account subject to withdrawal of funds by check, debit card or transfer.

  • Closing

    A meeting held to finalize the sale of a property. The buyer signs the mortgage documents and pays closing costs. This is also called a “settlement.”

  • Closing Costs

    These are expenses – over and above the price of the property – that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.

  • Collateral

    Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house.

  • Consumer Reporting Agency (or Bureau)

    An organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history. The agency gets data for these reports from a credit repository and other sources.

  • Conventional Fixed-Rate Mortgage

    Offers you a set interest rate and payments that do not change throughout the life, or “term,” of the loan. A conventional fixed-rate loan is fully paid off over a given number of years – usually 15, 20 or 30. A portion of each monthly payment goes toward paying back the money borrowed, or the “principal,” with the rest being interest.

  • Cosigner

    An individual who signs the note of another person as support for the credit of the primary signer. The cosigner becomes responsible for the obligation.

  • Credit Report

    A report detailing an individual's credit history that is prepared by a credit bureau and used by a lender to determine a loan applicant's creditworthiness.

  • Credit Score

    This measures a consumer's credit risk relative to the rest of the U.S. population, based on the individual's credit usage history. Higher scores represent lower credit risks, which typically result in better loan terms.

  • Cut-Off Time

    A time of day established by a bank for receipt of deposits. After the cut-off time, deposits are considered received on the next banking day.

  • Debit

    An account entry representing money you owe a lender or money that has been taken from your deposit account.

  • Debit Card

    This allows the account owner to access their funds electronically. Debit cards may be used to obtain cash from automated teller machines, or purchase goods or services using point-of-sale systems. The use of a debit card involves immediate debiting and crediting of consumers’ accounts.

  • Debt-to-Income (DTI) Ratio

    The percentage of a consumer’s monthly gross income that goes toward paying debts. Generally, the higher the ratio, the higher the perceived risk. Loans with higher risk are generally priced at a higher interest rate.

  • Default

    This occurs upon failure to make loan payments on a timely basis or comply with other loan requirements.

  • Deferred Payment

    A payment postponed until a future date.

  • Delinquency

    A debt that was not paid when due.

  • Direct Deposit

    A payment that is electronically deposited into an individual's account at a depository institution.

  • Discount

    In an adjustable-rate mortgage (ARM) with an initial rate discount, the lender gives up percentage points in interest to reduce the rate and lower the payments for part of the mortgage term (usually for one year or less). After the discount period, the ARM rate usually increases according to its index rate.

  • Down Payment

    Part of the purchase price of a property that is paid in cash and not financed with a loan.

  • Earnings Credit

    This is regular interest a bank grants to customers’ deposits, essentially in the form of a discount, to offset service charges.

  • Effective Gross Income

    A borrower's normal annual income, including overtime, that is regular or guaranteed. Salary is usually the principal source, but other sources of income may qualify if they are significant and stable.

  • Electronic Fund Transfer Act (EFTA)

    Implemented by Regulation E (Reg E), the act establishes the basic rights, liabilities and responsibilities of consumers who transfer funds initiated through an electronic terminal, telephone, computer or magnetic strip. The primary objective of the act is to protect individual consumers engaging in electronic funds transfers (EFT). In other words, those who open a deposit account primarily for personal, family or household purposes.

  • Electronic Funds Transfer (EFT)

    The transfer of money between accounts by consumer electronic systems, such ATMs and electronic payment of bills, rather than by check or cash.

  • Equity

    The difference between the fair market value (appraised value) of your home and your outstanding mortgage balances and other liens.

  • Escrow

    A contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties.

  • Escrow Payment

    The part of a mortgage monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.

  • Fannie Mae

    A congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

  • Federal Deposit Insurance Corporation (FDIC)

    A government corporation that insures the deposits of all national and state banks that are members of the Federal Reserve System.

  • Federal Reserve System

    The central bank of the U.S. The Fed, as it is commonly called, regulates the U.S. monetary and financial system.

  • FHA Mortgage

    Also known as a government mortgage, this is a mortgage that is insured by the Federal Housing Administration (FHA).

  • FICO® Score

    One of the most widely used credit scores in U.S. mortgage loan underwriting. Calculated based on information in your credit report, this three-digit number, which ranges from 300 to 850, helps lenders determine how likely you are to repay a loan. It affects how much you can borrow, how many months you have to repay and the interest rate.

  • Fiduciary

    An undertaking to act as executor, administrator, guardian, conservator or trustee for a family trust, authorized trust or testamentary trust (or receiver or trustee in bankruptcy).

  • Finance Charge

    The total cost of credit a customer must pay on a consumer loan, including interest.

  • First Mortgage

    The primary lien against a property.

  • Fixed Installment

    The monthly payment due on a mortgage loan, which includes both principal and interest.

  • Fixed-Rate Loan

    A loan where the interest rate and the payment remain the same over the life of the loan. The consumer makes equal monthly payments of principal and interest until the debt is paid in full.

  • Float

    The amount of uncollected funds represented by checks in the possession of one bank but drawn on other banks, or the time that elapses between the day a check is deposited and the day it is presented for payment to the financial institution on which it is drawn.

  • Foreclosure

    A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default.

  • Freddie Mac

    Chartered by Congress in 1970 to provide stability and affordability to homeownership and rental housing, Freddie Mac doesn’t lend directly to borrowers, but purchases loans on the secondary mortgage market to allow lenders to provide loans to more borrowers.

  • Fully Amortized ARM

    An adjustable-rate mortgage with a monthly payment that is sufficient to amortize the remaining balance at the interest accrual rate, over the amortization term.

  • GNMA (or Ginnie Mae)

    A government-owned corporation that assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. This is popularly known as Ginnie Mae.

  • Guarantor

    A party who agrees to be responsible for the payment of another party’s debts, should that party default.

  • Home Equity Line of Credit (HELOC)

    A line of credit secured by the equity in a consumer’s home. Interest paid on the loan is generally tax-deductible. (Consult a tax advisor, regardless.) The funds may be accessed by writing checks against the line of credit or by getting a cash advance.

  • Home Equity Loan

    A home equity loan allows you to tap into your home’s built-up equity, which is the difference between the amount that your home could be sold for and the amount that you still owe. This type of loan is sometimes referred to as a second mortgage or borrowing against your home.

  • Housing Expense Ratio

    This is the percentage of gross monthly income budgeted to pay housing expenses.

  • HUD-1 Statement

    A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.

  • Hybrid ARM

    A combination of a conventional fixed-rate mortgage and adjustable-rate loan – also called a 2/1, 3/1, 5/1 or 7/1 – that can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period than most ARMs.

  • Index

    This is the measure of interest rate changes a lender uses to decide how much an interest rate on an adjustable-rate mortgage will change over time.

  • Individual Retirement Account (IRA)

    A retirement savings program for individuals to which yearly tax-deductible contributions up to a specified limit can be made. The amount contributed is not taxed until withdrawn. Withdrawal is not permitted without penalty until the individual reaches age 59 1/2.

  • Installment

    The regular periodic payment that a borrower agrees to make to a lender.

  • Insufficient Funds

    When a depositor’s checking account balance is inadequate to pay a check presented for payment.

  • Insured Deposits

    Deposits held in financial institutions that are guaranteed by the FDIC against loss due to bank failure.

  • Insured Mortgage

    A mortgage that is covered by insurance protects the lender in case you're unable to make your mortgage payments due to default or foreclosure.

  • Interest

    The fee charged for borrowing money or the interest earned on bank savings.

  • Interest Accrual Rate

    Refers to the accumulated interest charges recognized in accounts but not yet paid. In most cases, it is also the rate used to calculate the monthly payments.

  • Interest Rate

    The amount paid by a borrower to a lender in exchange for the use of the lender’s money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump-sum payment when the issue matures.

  • Interest Rate Ceiling

    For an adjustable-rate mortgage, this is the maximum interest rate, as specified in the mortgage note.

  • Interest Rate Floor

    For an adjustable-rate mortgage, this is the minimum interest rate, as specified in the mortgage note.

  • Joint Account

    An account owned by two or more persons. Either party can conduct transactions separately or together as set forth in the deposit account contract.

  • Kiting

    Writing a check in an amount that will overdraw the account, but making up the deficiency by depositing another check on another bank. For example, mailing a check for the mortgage when your checking account has insufficient funds to cover the check, but counting on receiving and depositing your paycheck before the mortgage company presents the check for payment.

  • Late Charge

    The penalty a borrower must pay when a payment is made a stated number of days after the due date.

  • Liabilities

    A person's financial obligations, which include long-term and short-term debt.

  • Lien

    Legal claim against a property. Once the property is sold, the lien holder is then paid the amount that is owed.

  • Lifetime Payment Cap

    For an adjustable-rate mortgage, this is a limit on the amount that payments can increase or decrease over the life of the mortgage.

  • Lifetime Rate Cap

    For an adjustable-rate mortgage, this is a limit on the amount that the interest rate can increase or decrease over the life of the loan.

  • Line of Credit

    A pre-approved loan authorization with a specific borrowing limit based on creditworthiness. A line of credit allows borrowers to obtain a number of loans without re-applying each time, as long as the total of borrowed funds doesn’t exceed the credit limit.

  • Liquid Asset

    A cash asset or an asset that is easily converted into cash.

  • Loan

    A sum of borrowed money (principal) that is generally repaid with interest.

  • Loan Deposit

    This is a sum of money given to bind the sale of real estate, or to ensure payment or an advance of funds in the processing of a loan.

  • Loan-to-Value (LTV) Ratio

    The ratio of the loan principal (amount borrowed) to the appraised value (selling price). For example, on a $100,000 home with a mortgage loan principal of $80,000, the LTV is 80%. The LTV will affect programs available to the borrower. Generally, the lower the LTV, the more favorable the program terms offered by lenders.

  • Lock-In Period

    The guarantee of an interest rate for a specified period by a lender (including loan term and points, if any) to be paid at closing.

  • Margin

    The number of percentage points the lender adds to the index rate to calculate the adjustable-rate mortgage interest rate at each adjustment.

  • Maturity

    The date on which the principal balance of a loan becomes due and payable.

  • Minimum Payment

    The minimum dollar amount that must be paid each month on a loan, line of credit or other debt.

  • Money Market Deposit Account

    A savings account that offers a higher interest rate in exchange for larger-than-normal deposits. Insured by the FDIC, these accounts have limits on the number of transactions allowed and may require higher balances to receive the higher interest rate.

  • Monthly Fixed Installment

    That portion of the total monthly payment that is applied toward principal and interest.

  • Mortgage

    A legal document that pledges a property to the lender as security for payment of a debt.

  • Mortgage Insurance

    A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or a government agency.

  • Mortgage Insurance Premium (MIP)

    The amount paid for mortgage insurance.

  • Mortgage Life Insurance

    In the event that the borrower dies while the policy is active, the debt is automatically paid by insurance proceeds.

  • Mortgagor

    The borrower in a mortgage agreement.

  • Mutual Bank

    A mutual bank is a financial institution that specializes in offering savings accounts and originating home mortgages, and is owned (but not controlled) by depositors. Mutual banks don’t report to shareholders, and they’re typically known for prioritizing community giving more than other financial institutions.

  • Net Worth

    The value of a person's assets, including cash.

  • Non-Liquid Asset

    An asset that cannot easily be converted into cash.

  • Non-Sufficient Funds (NSF) Fee

    A non-sufficient funds (NSF) fee occurs when a transaction is declined or returned because you do not have an adequate balance to cover the presented transaction.

  • Note

    A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period.

  • Online Banking

    A service that allows an account holder to obtain account information and manage certain banking transactions through a personal computer via the financial institution's website on the internet.

  • Origination Fee

    A processing expense a lender charges a borrower when making a loan.

  • Outstanding Check

    A check written by a depositor that has not yet been presented for payment to or paid by the depositor’s bank.

  • Overdraft

    When the amount of money withdrawn from a bank account is greater than the amount actually available in the account.

  • Overdraft Fee

    An overdraft fee occurs when a transaction is paid when you do not have an adequate balance to cover the presented transaction.

  • Overdraw

    To write a check for an amount that exceeds the amount on deposit in the account.

  • Owner Financing

    A property purchase transaction in which the party selling the property provides all or part of the financing.

  • Payee

    The person or organization to whom a check, draft or note is made payable.

  • Paying (Payor) Bank

    A bank upon which a check is drawn and that pays a check or other draft.

  • Payment Change Date

    The date when a new monthly payment amount takes effect on an adjustable-rate mortgage.

  • Payoff

    The complete repayment of a loan, including principal, interest and any other amounts due. Payoff occurs either over the full term of the loan or through prepayments.

  • Payoff Statement

    A formal statement prepared when a loan payoff is contemplated. It shows the current status of the loan account, all sums due and the daily interest rate.

  • Payor

    The person or organization who pays.

  • Periodic Payment Cap

    A limit on the amount that payments can increase or decrease during any one adjustment period.

  • Periodic Rate Cap

    A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

  • Personal Identification Number (PIN)

    Generally a four-character number, this is the secret code given to credit or debit cardholders, enabling them to access their accounts. The code is either randomly assigned by the bank or selected by the customer. It’s intended to prevent unauthorized use of the card while accessing a financial service terminal.

  • Phishing

    The activity of defrauding an online account holder of financial information by posing as a legitimate entity.

  • 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 principal, interest, taxes and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months (usually three).

  • Point of Sale (POS)

    1) The location at which a transaction takes place. 2) Systems that allow bank customers to transfer funds from their deposit accounts and other financial transactions at retail establishments.

  • Points

    A point is equal to 1% of the principal amount of your mortgage. For example, if you have a mortgage for $165,000, one point means $1,650 to the lender.

  • Power of Attorney

    A written instrument that authorizes one person to act as another’s agent or attorney. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it passes away.

  • Pre-Approval

    The process of determining how much money you will be eligible to borrow before you apply for a loan.

  • Preauthorized Electronic Fund Transfers (EFT)

    Fund transfers approved in advance to recur at substantially regular intervals.

  • Preauthorized Payment

    A system established by a written agreement under which a financial institution is authorized by the customer to debit the customer’s account in order to pay bills or make loan payments.

  • Prepayment

    The payment of a debt before it becomes due.

  • Prepayment Clause

    A clause in a mortgage allowing the mortgagor to pay off part or all of the unpaid debt before it becomes due.

  • Prepayment Penalty

    A penalty imposed on a borrower for repaying the loan before its due date. (In the case of a mortgage, this applies when there is not a prepayment clause in the mortgage note to offset the penalty.)

  • Principal

    The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

  • Principal Balance

    The outstanding balance on a loan, excluding interest and fees.

  • Principal Payment

    The portion of a monthly payment that goes toward reducing the principal balance on a loan.

  • Principal, Interest, Taxes and Insurance (PITI)

    The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowner’s insurance.

  • Private Mortgage Insurance (PMI)

    Insurance offered by a PMI company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value percentage more than 80%, and the borrower pays the premium.

  • Qualifying Ratios

    These are calculations used to determine if a borrower can qualify for a mortgage, taking into consideration housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

  • Rate Lock

    A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate and lender costs for a specified period.

  • Real Estate Settlement Procedures Act (RESPA)

    A federal law that, among other things, requires lenders to provide "good faith" estimates of settlement costs and make other disclosures regarding the mortgage loan. RESPA also limits the amount of funds held in escrow for real estate taxes and insurance.

  • Recording

    The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage or an extension of mortgage, thereby making it a part of the public record.

  • Recording Fee

    A fee charged by a public official (typically a Registrar of Deeds or County Clerk) for including a document affecting the title to real property in the public record.

  • Refinance

    Paying off one loan with the proceeds from a new loan.

  • Refinancing

    A way of obtaining a better interest rate, lowering monthly payments or borrowing cash on the equity in a property that has built up on a loan. A second loan is taken out to pay off the first, higher-rate loan.

  • Regulation E

    Used as a means to implement the Electronic Fund Transfer Act (EFTA), Regulation E was put forth by the Federal Reserve Board to protect banking customers who use electronic methods to transfer money. It outlines the rules and procedures for electronic funds transfers (EFTs) and provides guidelines for debit card issuers.

  • Release of Lien

    To free a piece of real estate from a mortgage.

  • Reverse Mortgage

    This is a special home loan product that allows a homeowner age 62 or older the ability to access the equity that has accumulated in their home. The home itself will be the source of repayment. The loan is underwritten based on the value of the collateral (home) and the life expectancy of the borrower. The loan must be repaid upon death, the sale of your home or when you no longer live there as your principal residence.

  • Revolving Credit

    A credit agreement (typically for a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.

  • Safe (or Safety) Deposit Box

    A type of safe usually located in groups inside a bank vault and rented to customers for their use in storing valuable items.

  • Secondary Mortgage Market

    Where existing mortgages are bought and sold.

  • Security

    The property that will be pledged as collateral for a loan.

  • Service Charge

    A charge assessed by a depository institution for processing transactions and maintaining accounts.

  • Servicer

    An organization that collects mortgage 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. Gate City Bank retains the servicing on all mortgage loans.

  • Standard Payment Calculation

    The method used to determine the monthly payment required to repay the remaining balance of a mortgage, made in substantially equal installments over the remaining term of the mortgage, at the current interest rate.

  • Statement

    A summary of all transactions that occurred over the preceding month and could be associated with a deposit account or a credit card account.

  • Step-Rate Mortgage

    A mortgage that allows for the interest rate to increase according to a specified schedule (For example, seven years.), resulting in increased payments. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.

  • Stop Payment

    An order not to pay a check that has been issued but not yet cashed. If requested soon enough, the check will not be debited from the payer’s account. Most banks charge a fee for this service.

  • Terms

    The period of time and the interest rate arranged between creditor and debtor to repay a loan.

  • Third-Party Origination

    When a lender uses another party to originate, process, underwrite, close, fund or package the mortgages it plans to deliver to the secondary mortgage market. Gate City Bank does not use third-party origination.

  • Total Expense Ratio

    This is calculated by adding up total housing obligations as a percentage of gross monthly income, including monthly housing expenses, and other monthly debts.

  • Treasury Index

    An index used to determine interest rate changes for certain adjustable-rate mortgage plans.

  • Truth in Lending Act (TILA)

    A federal law that requires full disclosure of credit terms using a standard format. TILA is intended to facilitate comparison between lending terms offered by different financial institutions.

  • Two-factor Authentication (2FA)

    An extra layer of protection beyond a username and password that involves a second step in verifying your identity, such as through a text message with a temporary passcode, or a biometric factor like a fingerprint or facial scan.

  • U.S. Savings Bond

    These are issued in face-value denominations by the U.S. government, ranging from $50 to $10,000. They are typically long-term, low-risk investment tools.

  • Underwriting

    The process of evaluating a loan application to determine the risk involved for the lender.

  • VA Mortgage

    A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

  • Variable Rate

    Any interest rate or dividend that changes on a periodic basis.