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Annual Percentage Rate (APR)
A measure of the cost of credit, expressed
as a yearly rate. It includes interest as well as other
charges. Because all lenders follow the same rules to ensure
the accuracy of the Annual Percentage Rate, it provides
consumers with a good basis for comparing the cost of loans.
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Annual Percentage Yield (APY)
The annual percentage yield (APY) is the
actual annual rate of return you could earn if you leave
your principal and dividends in your account for a full
365-day year. The annual percentage yield you would actually
receive is dependent on the dividend rate, frequency of
compounding and average balances you maintain in your
account. It is the number most useful to you for comparing
deposit accounts.
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Automated Clearing House (ACH)
ACH is an automated process in which funds
are deposited electronically. The process also allows for
payments to be electronically withdrawn from your account.
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Automatic Teller Machine (ATM)
An ATM is an electronic banking terminal
that allows you to perform everyday financial transactions
such as withdrawing cash, transferring funds between
accounts, checking balances, and making deposits, through
the use of a Check/ATM Card and a personal identification
number.
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Certificate of Deposit (CD)
A Certificate of Deposit is an investment
account that must remain on deposit for a specific period of
time. A request for early withdrawal may be subject to
penalty. Certificates of Deposit are insured by the National
Credit Union Administration (NCUA) and offer a generally
higher dividend rate than savings and money market accounts.
The dividend rate is guaranteed until the maturity date
(unless specified otherwise).
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Compounding
Dividends paid on both the principal
balance and the accumulated dividends.
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Corporate Check
A Corporate Check is funds withdrawn from
a customer's account in the form of an Community 1st Check. Checks
can be made payable to the customer or a third party.
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CrCredit Disability Insurance
Credit Disability Protection provides for
the monthly payment of a loan if the borrower becomes
disabled. It offers a convenient, affordable way to make
sure that family or loved ones won't be saddled with the
burden of a debt in the event of a disability.
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Credit Life Insurance
Credit Life Protection provides for
payment of a loan balance in the event of the death of the
insured. It offers a convenient, affordable way to make sure
that family or loved ones won't be saddled with the burden
of a debt in the event of a death.
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Credit Protection Coverage
Credit Protection products are designed to
provide debt cancellation or suspension benefits to
borrowers who experience various "protected events" which
may impact the ability of the borrower to repay his loan
obligations. It offers peace-of-mind so borrowers do not
need to worry about making some or all (depending on the
protected event) loan payments should an unforeseen life
event occur.
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Direct Deposit
Direct Deposit is a method of depositing
your pay, social security, pension, other government funds,
and investment earnings directly into your account. This
method gives you the earliest possible access to your money.
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Dividend Rate
The dividend rate is the annual rate of
return the principal balance of your deposit earns without
compounding.
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Expressline
Expressline gives customers access to
their accounts from any touch-tone telephone 24 hours a day.
A variety of transactions can be completed via Expressline
including balance inquiries, transfers, stop payments, and
check orders. System entry requires an account number and a
personal identification number.
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Individual Account
An individual account is an account owned
by one person.
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Individual Retirement Account
An account that is set up for the specific
purpose of saving for retirement.
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Joint Account
A joint account is an account owned by two
or more persons. If your account is a joint account, the
account is owned as a joint account with rights of
survivorship unless otherwise stated on the membership
application.
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Living Trust Accounts
An account of living trust is an
individual account held by one or more trustees of a trust
for the benefit of one or more beneficiaries pursuant to a
trust agreement.
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Minimum Daily Balance
Minimum Daily Balance is the minimum daily
amount of money required in your account to qualify for
reduced or waived fees. If your minimum daily balance drops
below the required amount during a statement cycle, you will
be charged the agreed upon account fees during that cycle.
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Money Market Account
A Money Market account is a type of
savings account that generally provides a higher dividend
rate than standard savings accounts, while allowing check
access (subject to Regulation D). Money Market accounts are
insured by the National Credit Union Administration (NCUA).
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Money Order
A Money Order is a negotiable instrument
that replaces cash. The maximum value per money order is
$1,000.
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Monthly Statement
Your monthly statement provides a snapshot
of your financial transactions and account activity,
including deposits, withdrawals, Debit Card transactions,
and checks that have cleared your account.
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National Credit Union
Administration (NCUA)
NCUA is an independent agency of the
United States Government. It regulates, charters, and
insures the nation's federal credit unions. In addition,
NCUA insures state-chartered credit unions which desire and
qualify for federal insurance.
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NCUA-Insured Deposit
All deposits up to $100,000 are insured by
the National Credit Union Administration (NCUA), a U.S.
Government Agency. Individual Retirement Accounts are
insured separately up to $100,000.
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Non-Sufficient Funds (NSF) Check
Checks/drafts that are returned due to
lack of funds in the account from which they were drawn.
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Payable on Death (POD)
Designation
A POD designation is an instruction to a
financial institution that a designated account is an
account payable to the owner(s) during their lifetimes, and
upon the death of the last joint account owner, payable to
any named and surviving POD beneficiary.
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Payroll Deduction
Payroll Deduction is a manual process in
which a person's payroll is deposited. The payroll office
usually sends the financial institution one check, to be
dispersed to the named accounts.
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Personal Identification Number (PIN)
A PIN is a security code which is required
to access Internet Banking, Expressline or for ATM usage
with your VISA Debit Card or VISA Credit Card.
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Regulation B - Equal Credit
Opportunity
Regulation B prohibits creditors from
discriminating against credit applicants, establishes
guidelines for gathering and evaluating credit information,
and requires written notification when credit is denied.
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Regulation CC - Availability of Funds and
Collection of Checks
Regulation CC governs the availability of
funds and the collection and return of checks. This
regulation requires financial institutions to make deposits
available within certain time frames and stipulates certain
disclosures.
The regulation also provides that
depository institutions must disclose their funds
availability policies to their customers. In addition,
Regulation CC establishes rules designed to speed the
collection and return of checks and imposes a responsibility
on financial institutions to return unpaid checks in a
timely manner.
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Regulation D - Reserve Requirements
Regulation D sets uniform reserve
requirements on all depository institutions including
commercial banks, savings banks, savings and loan
associations, credit unions, and industrial banks that have
transaction accounts or non-personal time deposits.
As a result of the regulation, savings and
money market accounts are limited to six (6) pre-authorized,
automatic, telephonic or audio response transfers to another
account of yours or to a third party during any calendar
month. Of these six, no more than three (3) can be in the
form of a third party check or Debit Card purchase.
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Regulation DD - Truth In Savings
Regulation DD requires depository
institutions to disclose the terms of deposit accounts to
consumers, including the annual percentage yield, fees, and
the balance on which dividends are calculated.
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Regulation E - Electronic Fund Transfers
Regulation E sets rules for the
solicitation and issuance of Electronic Fund Transfer (EFT)
cards; governs consumers' liability for unauthorized
electronic fund transfers (resulting, for example, from lost
or stolen cards); requires institutions to disclose certain
terms and conditions of EFT services; provides for
documentation of electronic transfers (on periodic
statements, for example); sets up a resolution procedure for
errors; and covers notice of crediting and stoppage of
pre-authorized payments from a customer's account.
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Regulation Z - Truth In Lending
Regulation Z governs uniform methods of
computing the cost of credit, disclosure of credit terms,
and procedures for resolving errors on certain credit
accounts.
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Rights of Survivorship
With right of survivorship, upon the death
of one of the joint account owners, that person's interest
will become the property of the surviving joint account
owners.
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Safe Deposit Box
Safe storage provided at low cost to
protect valuables from theft, fire or loss.
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Third Party
Someone other than the primary person(s)
directly involved in a transaction or agreement.
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Travelers Cheques
Traveler’s Cheques are negotiable
instruments that replace cash. Traveler’s Cheques can be
purchased from Community 1st in denominations of $20.00, $50.00 and
$100.00.
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Valid Identification (ID)
Valid identification consists of:
- Current drivers license
- Passport
- Military ID
- Non-resident alien green card
- Valid State ID card in conjunction
with a satisfactory DeTech report (a report verifying
the validity of the social security number given)
Valid identification is required to open
an account and to conduct some in-branch transactions.
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VISA Debit Card
A VISA Debit Card is a Community 1st issued card
that can be used in place of a check when purchasing goods
and services. The cost of purchases is automatically
deducted from a checking account. With a personal
identification number, the card can also be used at
Automatic Teller Machines (ATMs).
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Wire Transfer
A wire transfer is an electronic transfer
of funds to/from a customer's account to/from another
financial institution. Wire transfers are processed through
the Federal Reserve and are available locally or
internationally.
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MORTGAGE GLOSSARY
Adjustable-Rate Mortgage
(ARM)
An ARM is a mortgage with an interest rate
that is adjusted periodically to reflect changes in market
conditions. Every ARM is tied to an index (the most common
of which is the Prime Rate). If the index rate has risen
since the last periodic adjustment on the loan, the monthly
payment will generally increase. If the index rate has
fallen, the monthly payment will generally decrease. An ARM
gives you the benefits of lower monthly payments in the
initial period of the loan.
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Agreement of Sale
An agreement between parties for the sale
of real estate. In some states it is the same as a Purchase
Agreement or Land Contract.
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Amortization
The process of paying off a loan by making
regularly scheduled payments of principal and interest
according to the terms of the loan.
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Appraisal
An appraisal is an estimate of the fair
market value of a property. It evaluates the property at a
given time based on facts regarding the location,
improvements, neighborhood and comparable sales.
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Appreciation
Increase in value or worth of property.
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Assessed Value
Value assigned to property by a local
government agency for tax purposes. An assessed value does
not necessarily equal the appraised value for purposes of
obtaining a mortgage loan.
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Assumption
Taking over an existing debt. Some
mortgages are assumable and may provide greater resale value
to your home. Both FHA and VA loans are fully assumable.
Some adjustable rate mortgages may be partially assumable.
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Balloon Payment
The final payment of a mortgage which is
larger than the regular payment; it usually pays off the
debt.
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Binder
Preliminary agreement of sale, usually
accompanied by earnest money.
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Blanket Mortgage
A mortgage covering more than one
property.
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Bridge Financing
A form of interim loan, generally made
between a short term loan and a long term loan, when the
borrower needs to have more time before taking on long term
financing.
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Buydown
An interest rate buydown is the temporary
reduction of the rate of interest or the monthly payments
borrowers pay to the lender. The shortfall between the rate
on the note and initial payment made by the borrower is
usually paid by a third party such as a seller or builder.
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Caps
Caps are used on adjustable rate mortgages
(ARMs) to limit the interest rate and/or the payment. Most
ARMs have a periodic cap that is around 2% per year and a
life cap of around 5% - 6% over the life of the loan.
Payment-only caps sometimes create negative amortization
where the principal balance of the loan increases rather
than decreases over time.
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Closing
Conclusion of a real estate sale, where
the title of the property is transferred to the new owners
and funds are transferred to the appropriate parties
(seller, old lender, real estate broker, etc.).
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Closing Agent
A neutral third party that facilities the
closing of a real estate transaction. The closing agent can
be an escrow company, title company, or attorney.
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Closing Costs
Expenses incurred by the buyer and the
seller in a real estate transaction. There can be
non-recurring cost that include points or appraisal fees,
that are a one time charge or recurring cost such as taxes
and insurance that incur while the new buyer owns the real
estate.
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Closing Statement
Statement prepared for the buyer and
seller itemizing all of the costs of a real estate
transaction.
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Co-Maker
A person who is equally responsible for
repayment as the borrower.
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Construction Loan
Short term financing of real estate
construction. Generally followed by the long term financing
called a "take out" loan, issued upon completion of
improvements.
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Contingency
Condition which must be satisfied before
the buyer can complete the purchase of a property.
Contingencies are generally outlined in the purchase
contract between the buyer and seller.
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Conventional Mortgage
A mortgage loan that is not guaranteed or
insured by the government. FHA and VA loans are not
conventional loans.
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Conversion Clause
A provision in some ARMs that allows the
ARM to be changed to a fixed-rate loan at some point during
the term. The conversion is usually allowed at the end of
the first adjustment period.
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Deed of Trust/Mortgage
A written legal document which transfers
ownership of real estate property from one party to another.
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Default
Failure to make mortgage payment or a
violation of other provisions of the mortgage note.
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Deficiency Judgment
A personal claim against the debtor, when
foreclosed property does not yield enough at the sale to pay
off the loan and the interest against it.
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Depreciation
Decrease in value to real estate property.
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Disbursements
Payments made during the course of an
escrow or at closing.
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Down payment
Cash to be paid by the buyer at closing to
complete a real estate transaction.
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Earnest Money
Cash to be paid by the buyer at closing.
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Equity
The difference between the market value of
the property and the homeowner's mortgage debt.
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Escrow
Escrow includes funds given to a third
party to be held until a specific occurrence; may refer to
earnest money deposit; can also include a lender collecting
and paying the taxes and insurance on behalf of the
borrower.
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Escrow Payment
The portion of a debtor's monthly payment
held in trust by the lender to pay for taxes, mortgage
insurance, hazard insurance, lease payments, and other items
as they become due.
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Federal Home Loan Mortgage
Corporation (FHLMC) (Freddie Mac)
FHLMC is a stockholder-owned corporation,
created in 1970 and chartered by Congress to increase the
supply of funds that mortgage lenders, such as commercial
banks, mortgage bankers, savings institutions and credit
unions, can make available to homebuyers and multi-family
investors. The company buys mortgages from lenders, packages
these mortgages into securities and sells them to investors.
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Federal National Mortgage Association (FNMA)
(Fannie Mae)
FNMA is one of the major secondary market
investors that purchases loans from mortgage companies and
other depository institutions. The company is a private
corporation and its stock is traded on the New York Stock
Exchange.
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First Mortgage
Mortgage holding priority over the claims
of subsequent lenders against the same property.
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