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Dictionary

Banking | Investments/Savings | Mortgages | Internet Banking

Banking

ATM - Automated Teller Machine

A machine which enables a customer to perform basic banking activities (e.g., checking your balance, withdrawing or transferring funds, etc.) Typically available 24 hours a day.

ATM Card

A card which lets you withdraw your money from ATMs.

Credit Bureau

An agency which collects information about the credit worthiness of individuals.

Credit Rating / Scoring

A ranking (based on detailed financial analysis by a credit bureau) of one's financial history, specifically as it relates to their ability to meet debt obligations. Lenders use this information to decide whether to approve a loan.

Debit Card

Card that lets you access your money from an ATM or make purchases at merchants that accept MasterCard®. The amount of purchase is withdrawn from your checking account as if you had written a check.

Financial Statement

A written report which quantitatively describes the financial health of a company. This includes an income statement and a balance sheet, and often also includes a cash flow statement. Financial statements are usually compiled on a quarterly and annual basis.

Gross

The total amount before anything is deducted.

Liability

A financial obligation, claim, debt, or potential loss.

Net

The amount remaining after certain adjustments have been made for debts, expenses or deductions.

Sweep Accounts

An account whose cash balance is automatically transferred into an interest-bearing investment, such as a money market fund. Or, if the account balance is negative, funds are temporarily transferred in to the account.

SWIFT - Society for Worldwide International Fund Transfers

An electronic payment system used to transfer money around the world. Clients are given an 18 digit SWIFT code.

Tiered interest rates

The interest rate you receive depends on the balance in your account. When the balance goes beyond a certain level, your entire balance automatically earns interest at the higher rate. Alternatively, if a withdrawal takes your balance below a certain level, your entire balance earns interest at the lower rate.

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Investments / Savings

AGI - Adjusted Gross Income

The amount used in the calculation of an individual's income tax liability; one's income after certain adjustments are made, but before standardized and itemized deductions and personal exemptions are made.

Annuities

Annuities are a proven, long-term type of investment especially appropriate for retirement planning. They are a good way to defer tax liabilities and can potentially build a more secure long-term future.

APR - Annual Percentage Rate

The annual cost of a mortgage, including interest, mortgage insurance, and the origination fee (points), expressed as a percentage.

APY - Annual Percentage Yield

The rate of return on an investment for a one-year period. For an interest-bearing deposit account, such as a savings account, APY is equal to one plus the periodic rate (expressed as a decimal) raised to the number of periods in one year. Due to compounding, the APY will be greater than the periodic interest rate multiplied by the number of periods in the year.

Bond

A certificate of debt that is issued by a government or corporation in order to raise money with a promise to pay a specified sum of money at a fixed time in the future and carrying interest at a fixed rate.

Capitalization of interest

Interest your money has earned that's added to your account or designated account.

Gross Interest

The interest that is applied to savings accounts before any tax is deducted.

IRA - Individual Retirement Account

A tax-deferred retirement account for an individual that permits them to set aside up to $4,000 per year and $5,000 per year if over the age of 50, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10% penalty).

Mutual Funds

Mutual funds pool the money of numerous investors, who have similar investment objectives, to create professionally managed, diversified portfolios. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Then, mutual funds may invest its shareholders' money in stocks, bonds, money market instruments or any combination of these.

Net Interest

The interest that is applied to savings accounts following the deduction of income tax.

Options

Options can be traded on a specific amount of a given stock, commodity, currency, index, or debt. They can also be used to help defer tax liability and guard against price fluctuations.

Roth IRA

A new type of IRA, established in the Taxpayer Relief Act of 1997, which allows taxpayers, subject to certain income limits, to save for retirement while allowing the savings to grow tax-free. Taxes are paid on contributions, but withdrawals, subject to certain rules, are not taxed at all.

Stocks

An instrument that signifies an ownership position/equity in a corporation. Only certain types of companies (i.e., corporations), have stock. Other types of companies such as sole proprietorships and limited partnerships do not issue stock.

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Mortgages

ARM - Adjustable Rate Mortgage

A mortgage in which the interest rate is adjusted periodically according to the pre-selected index.

CAP

A maximum rate that a mortgage cannot go above for a set period of time.

Completion

The moment when you become the legal owner of a property, and consequently, the moment when you can move in.

Escrow

Escrow includes all funds collected to cover expenses to be paid under the Mortgage including, but not limited to taxes, special assessments, ground rents and other charges that are or may become first liens on the Mortgaged Property, as well as property insurance premiums and mortgage insurance premiums.

Equity

The difference between the value of the Mortgaged Property and the total dollar amount of all Mortgages and other liens secured by the Mortgage Property.

Fixed interest rate

An interest rate that's fixed for a length of time: it will not go up or down - even if the variable mortgage rate does.

LTV - Loan to Value

The loan amount divided by the lesser of appraised value or purchase price.

Mortgagee

An institution that gives someone a mortgage (i.e., the building society).

Mortgagor

Someone who takes out a mortgage (i.e., the borrower).

PITI

Principal, interest, taxes, and insurance.

Permanent Financing

A Mortgage loan, usually covering development costs, interim loans, construction loans, financing expenses, marketing administration, legal and other costs. The loan differs from the construction loan in that the financing goes into place after the project is constructed and open for occupancy.

Prepaids

Prepaid interest, prepaid real estate taxes and Escrows, initial mortgage insurance premium, hazard insurance premiums, and Escrows associated with a Mortgage transaction.

PMI - Private Mortgage Insurance

Insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default. Required on all loans with a LTV in excess of 80%.

Refinancing

The repayment of a debt from the proceeds of a new loan using the same property as security.

Rescission

The cancellation or annulment of a transaction or contract by the operation of mutual consent. Refinances require a 3-day rescission period after closing.

Title

The legal right to ownership of a property.

Title deeds

Documents showing who owns a property.

Underwriting

The analysis of risk and the matching of it to an appropriate rate and term.

Variable interest rate

An interest rate, which can go up or down in line with general interest rates.

Warranty deed

Purchase document, which transfers ownership from the seller to the buyer.

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Internet Banking

Bandwidth

The amount of data that can be transmitted in a fixed amount of time. For digital devices, the bandwidth is usually expressed in kilobits per second (Kbps).

Browser

Short for Web browser, a software application used to locate and display Web pages. The two most popular browsers are Microsoft Internet Explorer and Netscape Navigator. Both of these are graphical browsers, which means that they can display graphics as well as text.

Encryption

The conversion of data into a secret code and used to provide security in the transmission of data. Nationwide requires devices to support 128 bit encryption to access Internet Banking.

HTML

HyperText Markup Language - A language used to produce Internet pages.

HTTP

Hypertext Transfer Protocol. Defines how messages are formatted and transmitted and what actions Web servers and browsers should take in response to various commands. For example, when you enter a URL in your browser, this actually sends an HTTP command to the Web server directing it to fetch and transmit the requested Web page.

ISP

Internet Service Provider, a company that provides access to the Internet. For a monthly fee or free, the service provider gives you a software package, username, password and access phone number.

Portal

A site featuring a suite of commonly used links/services, serving as a starting point and frequent gateway to other web sites and web applications. Many portals allow the user to customize the page to their needs.

SSL

Secure Socket Layer - an encryption method for secure data transfer.

URL

Uniform Resource Locator, the global address of documents and other resources on the World Wide Web, e.g. www.premierbanks.com.

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