- Start with Planning
- Looking at Your Spending and Debt
- Building a Savings Plan
- Managing Your Credit and Debt
- Refinancing Your Mortgage
- Taking Out a Home Equity Loan
- Reverse Mortgage
- Other Borrowing Approaches
- Identity Theft
Adjustable Rate Loan (ARM): A loan where the interest rate changes—usually once a year, or once every three or five years, depending on the loan. Payments may either increase or decrease.
After-tax: An amount of money after the tax is taken out. For example, you get paid $1,000. The tax taken out is $250. The after-tax amount is $750 ($1,000 minus $250).
Annual Percentage Rate (APR): The annual interest cost (including points) of the loan, shown as a percentage.
Appraisal: An assessment of the value of a property. An appraisal is usually required for refinancing of a loan.
Asset: Something of value that you own.
Balance sheet: A statement that lists your assets, liabilities, and net worth.
Balloon Mortgage: A type of loan secured by real property, with monthly payments based on a fixed interest rate. The loan is usually for a short term and payments may cover interest only with principal due in full at the end of the term.
Bankruptcy: The process of being declared unable to pay your debts by a court. Your assets are then distributed among your creditors.
Break-Even: The amount of time it takes to recover the cost of refinancing through your cash flow savings because of a lower mortgage payment.
Capital Improvements: Any construction done to your home that increases the value of your home or extends its useful life, and is not done as a repair.
Cash Alternatives: Types of savings that can be turned into cash quickly.
Cash Flow: Your income minus expenses.
Cash Surrender Value: The amount of cash you can take out of a life insurance policy.
Cash value insurance: Insurance that builds up a monetary value over time.
Chapter 7: A type of bankruptcy that is a liquidation of debt.
Chapter 13: A type of bankruptcy that is a reorganization of debt.
Closing Costs: Amounts paid upon settlement of a mortgage loan for things such as attorney fees, points, taxes, title insurance, escrow amounts, and appraisal fees.
Collateral: Assets that you own that you can use as security to obtain a loan, such as real estate and stock investments.
Collection Agency: A company that collects money from debtors.
Consumer Debt Ratio: The percentage of your net income that is spent on non-housing debt.
Co-Sign: An additional party to a loan. A co-signer will have responsibility to pay if the borrower defaults.
Credit Line: An amount of money, set by the lender, that you are entitled to borrow. These loans can be either secured (home equity line of credit) or unsecured (personal line of credit).
Credit Rating: A measure of how good your credit is.
Credit Report: A listing of your credit accounts and payment history.
Credit Reporting Agency: A company that keeps credit information on consumers and distributes it to creditors in the form of credit reports.
Debt Consolidation: To bring all or most of your debts together in one loan.
Discharge In Bankruptcy: Having a debt forgiven or reduced by a bankruptcy court.
Draw Period: The time period set by your lender during which you may use your line of credit.
Emergency funds: Amount of money set aside for unexpected events.
Equity: The current appraised value of your home, minus the outstanding mortgage balance(s).
Expense record: A listing of the money you've spent.
Finance Charge: The amount you pay to use someone else's money, e.g., interest, fees, etc.
Fixed expense: An expense that you are committed to pay, such as rent or mortgage payments, that generally remains the same from month to month.
Fixed Interest Rate: The percentage charged for a loan that remains the same for the life of the loan.
Good Faith Estimate: An itemized estimate from a lender of the total closing costs to get a loan.
Home Equity Loan: A loan where you may borrow an amount of money based upon a percentage of the value of your home, less other loans (mortgage, etc.).
Interest: A charge you pay when you borrow money.
Liability: Something that is owed.
Line of Credit (Credit Line): An amount of money, set by the lender, that you are entitled to borrow. These loans can be either secured (home-equity line of credit) or unsecured (personal line of credit).
Liquid funds: Types of savings that can be turned into cash quickly, without loss of principal.
Lock In: Committing to a specific interest rate on your loan.
Margin Loans: A loan where you may borrow money based upon a percentage of the market value of your investments. Your investments are used as collateral to get the loan.
Net worth: What you own (assets) minus what you owe (liabilities).
Offer in Compromise: An offer to the IRS to pay back taxes for less than full value.
Payback Period (Term): The amount of time you have to make payments on your loan.
Personal property: Things like furniture, clothes, jewelry, furs, silver & china.
Points: Prepaid interest on the amount that you borrow, generally to buy real estate. For example, you may pay one point (equal to 1% of the loan) or two points (equal to 2% of the loan).
Primary Residence: Your main home where you spend the majority of your time and the one you consider your primary home.
Principal: The amount of money borrowed, excluding interest and any other fees.
Principal Residence: The place you call home. Your main home where you spend the majority of your time and the one you consider your primary home.
Refinance: Reprocessing of a loan to change the interest rate, principal balance or the repayment period.
Roth IRA: A type of Individual Retirement Account (IRA) funded with after-tax dollars which will allow you to save money on a tax-free basis, provided you meet the eligibility requirements and the holding period rules.
Secured Loan: A loan that is guaranteed by an asset (collateral), which may be forfeited to the person or institution that loaned you the money in case you do not make the required payments.
Take-home pay: The amount of money you actually receive in your paycheck.
Term Loan: A loan that comes due after a particular length of time (the "term").
Time Value of Money: The concept that, over time, money can earn interest or appreciate so that it is worth more today than a dollar to be received in the future. For example, paying money up front in a transaction adds to the cost of the transaction, since you could have earned interest on that money had you kept it and invested it yourself.
Unsecured Loan: A loan based on your credit history. There is no asset that is used as collateral.
Variable expense: A flexible, changeable expense, for example, the amount you spend on clothes.
YTD: Year-to-Date, for example how much you've earned or paid this year.