Glossary of Terms
Credit Glossary
It's hard enough trying to stay on top of your credit let alone learn the industry lingo. We've compiled a glossary of industry terms to help you stay ahead of the curve when dealing with your credit, auto loans, home loans, debt, and savings.
- Magnetic ("Mag") stripe
- The colored band, or stripe, on the back of a plastic credit or debit card. Contains coded magnetic information including customer and account information required to complete electronic financial transactions. When you "swipe" your card through a card reader or terminal, the mag stripe is what gets read.
- Margin
- An amount the lender adds to an index to determine the interest rate on an adjustable-rate mortgage.
- Market value
- The highest price a buyer would pay, and the lowest price a seller would accept, on a given piece of property. Market value may be different from the price a property could actually be sold for at a given time.
- Maturity
- The date on which the principal balance of a loan becomes due and payable.
- Minimum payment
- The lowest amount of money a customer may pay on a credit card statement each month to keep the account in good standing.
- Money market account
- A liquid savings account that earns interest but limits the amount of transactions each month. Generally requires a minimum monthly balance.
- Monthly fixed installment
- The portion of the total monthly payment applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn't cover all of the interest. The loan balance therefore increases instead of decreasing.
- Mortgage
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- A lien on a property that secures the promise to repay a loan.
- A legal agreement by which a sum of money is lent for the purpose of buying buildings, land, etc. The property purchased serves as collateral for the mortgage.
- Mortgage banker
- A company that originates loans and resells them to secondary mortgage lenders, like Fannie Mae or Freddie Mac.
- Mortgage broker
- A firm that originates and processes loans for a number of lenders.
- Mortgage insurance
- A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan. Mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.
- Mortgage insurance premium
- A monthly payment - usually part of the mortgage payment - paid by a borrower for mortgage insurance.
- Mortgage life insurance
- A type of term life insurance. In the event that the borrower dies while the policy is in force, the mortgage debt is automatically paid by insurance proceeds.
- Mortgage Modification
- A loss-mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.
- Mortgagee
- The lender.
- Mortgagor
- The borrower or the homeowner.
