ACH Origination: The ability to send and collect money electronically using the Automated Clearing House network. Adjustable Rate Loan: An adjustable rate loan, also known as Variable Rate, is a loan in which the interest rate could change at any time during the length of the loan. Annual Percentage Rate (APR): APR is the annual cost of a loan, including applicable interest and fees. APR is conveyed as a percentage. Annual Percentage Yield (APY): APY represents the interest earned on deposits yearly. APY is conveyed as a percentage. Appraisal: An appraisal is the estimate of an asset’s value. ATM (Automated Teller Machine): An ATM is an electronic banking machine that is used to make deposits, withdrawals and transfer money. An ATM card or debit card and PIN number is necessary in order to use an ATM. ATM Card: An ATM card gives you access to your accounts through an ATM. You will also need a Personal Identification Number (PIN) to use an ATM card. Attachment: An attachment is a legal claim or lien against an asset.

Back-end Ratio: Back-end ratio is a mortgage loan calculation in which housing expenses plus long-term debt is conveyed as a percentage of your monthly gross income. A back-end ratio of no higher than 36% is preferred by most banks. Balance: A balance represents the amount of money you have in a bank account, or the amount of money remaining on a loan. Bank Check: See “Cashier’s Check”. Bankruptcy: Bankruptcy is a legal declaration of insolvency. Bankruptcy will be included in your credit history for as much as 10 years and will not resolve credit record issues.

Cashier’s Check (also called a Bank Check or Teller’s Check): A cashier’s check is a check written by your bank and is guaranteed not to bounce. In order to obtain a cashier’s check, you must provide money from your account in the exact amount of the check and tell your bank who the check should be made out to. A service fee is typically charged for this service. Cash Management: A specialized department that offers services specifically designed to help optimize the cash flow of our commercial, municipal and not for profit customers. Checking Account: A deposit account that allows you to write checks or use online tools to make payments. ChexSystems or TeleCheck: These are systems that a bank may use to verify your information, including your checking account history, history of bounced checks, or other negative details reported about your checking history. Closing Costs: Closing costs are the fees and expenses paid to complete a real estate transaction and finalize a mortgage loan. They typically include items such as lender fees, appraisal fees, title insurance, recording fees, taxes and prepaid escrow amounts. Collateral: Collateral represents pledge of specific property to a lender to secure prepayment of a loan. Consumer Installment Loan: Consumer Installment Loans are loans that are paid back in equal monthly installments for a specific period of time. Co-signer: A co-signer is someone who agrees to repay a loan if you fail to pay. Co-signers are often included on a loan when you have poor credit history or if you haven’t established a credit history. Credit Report: A report that a bank and creditors use to attain details regarding your credit history.

Deposit: Money you add to an account. Debit Card: A plastic card with a credit card company logo (ie MasterCard®), that allows you access to your accounts via an ATM and also allows you to make purchases outside of the bank where credit cards are accepted. Deposit Interest: Money that a bank pays into your account for keeping your money at that bank. Deposit interest is based on the APY specific to an account. Direct Deposit: A method of depositing a paycheck or benefit check into an account electronically, without visiting a bank and making a deposit. Down Payment: The portion of a purchase price that a buyer pays in cash.

Electronic Bill Pay: A service that uses money from your checking account to automatically pay your bills. Equity: The value of an asset, subtracting the debt you owe on the asset. Also see “Home Equity”. Escrow Account: An account that is created to hold tax and/or insurance payments until the payments are due (usually for a home).

Fees: Fees are money that a bank may take out of an account in exchange for services they provide (such as a monthly maintenance fee) or as a penalty (for example, if you bounce a check). Finance Charge: The total cost of borrowing money, including interest and certain fees associated with your loan or credit account. Fixed-Rate Loan: A fixed-rate loan is a loan that has an interest rate that remains the same throughout the life of the loan. Foreclosure: A legal proceeding, initiated by a creditor, in which a bank takes possession of collateral that was used to secure a loan that has defaulted.

Garnishment: A legal process that allows money to be taken directly from a person's paycheck or bank account to pay a debt, typically after a court order is issued. Grace Period: A period of time after a payment due date during which you can make your payment without incurring a late fee or other penalty, as permitted by your loan or account terms.

Home Equity: The money that remains after accounting for the value of a property minus the debt. Home Equity Loan: A loan that utilizes the equity in a home as collateral. Home Equity Line of Credit: An open-end loan which allows you to make withdrawals up to a certain limit.

Identity Theft: Identity theft is a federal crime in which someone illegally obtains and uses another person’s personal information in a fraudulent manner. Installment Loan: See “Consumer Installment Loan”. Interest: See “Loan Interest”

Judgment Lien: A legal claim places against a person's property as a result of a court judgement for an unpaid debt. The lien may need to be paid before the property can be sold or refinanced.

Line of Credit: An open-end loan which allows you to make withdrawals up to a certain limit. Lien: A legal claim placed on a property as security for a debt. A lien may need to be paid or released before the property can be sold or refinanced. Loan: Money you borrow from a bank or another entity with a written promise to pay it back in the future. Loan Interest: The amount of money a bank charges for letting you borrow money. Interest rates are either fixed (the interest rate remains the same throughout the life of the loan) or variable (the interest rate could change during the life of the loan, as written in the loan contract).

Minimum Balance: The minimum amount that must be maintained in an account to avoid fees or receive certain account benefits, as specified in the account agreement. Money Order: A money order is like a check and can be used to make payments or purchases. A money order can be obtained at Centreville Bank in any amount up to $2,000. There is typically a small processing fee. Mortgage: A mortgage is a loan used to purchase a home or a commercial property. The borrower repays the loan over time, and the property serves as security for the loan.

Net Worth: The difference between your assets and your debt.

Overdraft: An overdraft occurs when you do not have enough money in an account to cover the payments you’ve made. Also referred to as a bounced check, this can lead to a fee being charged to your account. Overdraft Protection: A service that helps cover transactions when available funds are insufficient; typically through a linked account, line of credit, or other overdraft coverage option. Terms and fees may apply.

Phishing: The act of sending an email to an individual, falsely claiming to be a legitimate enterprise in an attempt to persuade the individual to surrender information that will be used for identity theft. PIN: A PIN (Personal Identification Number) is a confidential numeric code used to verify your identity and help protect your accounts when making transactions, accessing an ATM, or using a debit card. Principal Payment: A principal payment is an amount applied to an outstanding balance of a loan, not to the interest owed. Private Mortgage Insurance (PMI): PMI is mortgage insurance that is typically required for buyers who do not have at least a 20% down payment. It protects the lender if the buyer defaults on the mortgage.

Rate Index: A published benchmark interest rate that, together with a lender's margin, is used to calculate the interest rate on an adjustable-rate loan. Rate Lock: A lender's commitment to honor a specific mortgage interest rate for a set period of time, as long as your loan closes within that period and there are no significant changes to your application. Repossession: The confiscation of collateral that was used to secure a loan that has defaulted. Right to Rescind: The right under federal law to cancel certain credit transactions secured by your principal dwelling within three business days after closing, receipt of required disclosures, or receipt of the notice of the right to rescind, whichever occurs last.

Savings Account: A type of deposit account that earns interest on the account balance. Secured Loan: A loan where the borrower offers collateral for the loan; the borrower gives up their right to the collateral if the loan is not repaid as the agreement stipulates. Signature Card: A document executed when opening or modifying a deposit account that identifies the account owner(s), authorized signers, ownership designation, and acceptance of the account terms and conditions. The signature card forms part of the contractual agreement between the customer and the bank.

Telephone Banking: Telephone banking allows you to access some banking services via phone, such as checking an account balance, transferring money and obtaining account history. Teller’s Check: See “Cashier’s Check”.

Unsecured Loan: A loan in which the lender does not require collateral.

Variable-Rate Loan: A loan that has an interest rate that could change at any time during the life of the loan, as stipulated in the loan agreement. Also known as “Adjustable Rate”.

Withdrawal: The process of removing money from a bank account via check, ATMs or withdrawal slips. Wire Transfer: A secure electronic transfer of funds between financial institutions, used to send money directly to a recipient's account within the United States or internationally.

Banking Terms Glossary | Centreville Bank

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