Adjustable-rate mortgage (ARM) -- Home loan in which the interest rate is changed periodically based on a standard financial index. Most ARMs have caps on how much an interest rate may increase. Back to top

Amount financed -- The principal that is financed. It could include the cost of the purchase and other items rolled into the payments. Back to top

Appraised value -- An educated opinion of how much a property is worth. Back to top

Balloon mortgage -- A loan that has regular monthly payments which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years. Back to top

Bank -- An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers. A bank must be chartered and meet certain criteria. Chartering is done by the Comptroller of the Currency for national banks, by the Federal Reserve System for state member banks, by the Federal Deposit Insurance Corporation (FDIC) for insured banks, and by state regulatory agencies. Also referred to as a commercial bank. Back to top

Bankruptcy -- A legal proceeding that protects a debtor from legal action by some creditors. There are two basic ways of filing for personal bankruptcy. A Chapter 7 bankruptcy declaration gets rid of all debts (except some taxes and maybe alimony payments); Chapter 13 allows a borrower with a steady income to pay off bills over a 36- to 60-month period. Back to top

Borrower -- One who gets a loan. Back to top

Buy-down mortgage -- A home loan in which the lender charges below-market interest in exchange for discount points. Back to top

Capital -- Money that is used to make money; for example, to buy rental property or a business. Back to top

Cash-out refinance -- The taking out of a new mortgage on the same property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is taken out in cash. Back to top

Classified property tax -- A local government's levy on real estate that varies depending on the use of the property. Usually, commercial property is taxed more heavily than residential property where a classified property tax exists. Back to top

Closing -- The meeting at which the sale of a property is completed. The buyer signs the lender agreement for the mortgage and pays closing costs and escrow amounts. The buyer and seller sign documents to transfer ownership of the property. Also known as the settlement. Back to top

Co-maker -- Any party that co-signs a promissory note. All co-makers assume responsibility for the loan if any of the other co-signers renege. Back to top

Combined loan-to-value ratio -- A person's overall mortgage debt load, expressed as a percentage of the home's fair market value. Someone with a $50,000 first mortgage and a $20,000 home equity loan secured against a $100,000 house would have a CLTV ratio of 70 percent. Back to top

Commercial bank -- A financial institution that provides a broad range of services, from checking and savings accounts to business loans and credit cards. Back to top

Community bank -- Community bank: A bank, often with branches, that is locally owned and operated, and is not part of a bank holding company. Also referred to as an independent bank. Back to top

Comparative market analysis -- A method of estimating a property's value by comparing the sales prices of similar properties that have sold recently. Back to top

Confirmation -- Approval by the bankruptcy court of a plan of reorganization that has met the many requirements of code section 1129, Once approval is given, all of the debtors' pre-petition debts are discharged (eliminated) as provided by the plan. Back to top

Conforming loan -- A mortgage that meets the requirements to be eligible for purchase or securitization by one of the government-sponsored enterprises such as Fannie Mae, Freddie Mac and Ginnie Mae. Requirements include size of the loan, type and age. Back to top

Construction loan -- A short-term, interim loan to pay for building a house. The lender pays out the money in stages, called draws, as work progresses. Back to top

Consumer credit -- Loans for personal or household use as opposed to business or commercial lending. Loans are generally unsecured, not backed by collateral. Back to top

Consumer debts -- Debts incurred for personal, as opposed to business, needs. Back to top

Conventional loan or conventional financing -- A mortgage that is not insured or guaranteed by a government agency such as the Federal Home Administration (FHA) or Veterans Administration (VA). Back to top

Conventional mortgage -- Usually refers to a fixed-rate, 30-year mortgage that is not insured by the FHA, Farmers Home Administration (FmHA) or Veterans Administration. Back to top

Convertible ARM -- An adjustable rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions. Back to top

Convertible mortgage -- An adjustable-rate home loan which the borrower has the option at specified times of changing into a fixed-rate loan. Back to top

Cooperative mortgage -- A loan that allows the borrower to buy shares of a co-op. Back to top

Credit -- Money that a lender gives to a borrower on condition of repayment over a certain period. Back to top

Credit bureau -- A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union. Back to top

Credit history -- A record of a person's debt payments. Back to top

Credit rating -- A judgment of someone's ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score. Back to top

Credit report -- A report that contains information about your borrowing habits and money-managing skills. Lenders use it to determine whether to approve a loan and to set the terms. A person with a good credit report is likely to get a better interest rate than someone with a poor credit report. Back to top

Credit score -- A number, roughly between 300 and 800, that reflects the credit history detailed by a person's credit report. Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make. Back to top

Credit union -- A nonprofit, cooperative financial institution owned and controlled by the people who use its services, usually a group such as employees in the same company or industry. Credit unions historically have been able to offer lower rates and fees and still operate in the black. Credit unions rely on a financial reserve to absorb unexpected losses from loan defaults or other financial setbacks, and the majority of credit unions carry federal deposit insurance that protects individual accounts up to a specified amount in the event the credit union fails. Back to top

Creditor -- One who is owed money. Back to top

Debt -- Money one person or firm owes to another person or firm. Back to top

Debt consolidation -- The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan. Back to top

Debtor -- Technically, a person who has filed a petition for relief under the bankruptcy laws. More generally, anyone who owes. Back to top

Delinquent mortgage -- A home loan in which the borrower has failed to make payments on time, as specified in the loan agreement. Back to top

Deposit -- Money given by a buyer when making a formal offer to bind the sale. Also called earnest money. It is also the term used for money placed in a bank or other financial institute. Back to top

Earned income -- All the money you earn. This includes any wages, salaries, tips, net earnings (if you're self-employed) and any other income received for personal services. Investment income, such as dividends and interest, is not counted as earned income. See also Unearned Income. Back to top

End loan -- The final mortgage on a property, as opposed to a construction or other interim loan. Back to top

Equity -- The value of a homeowner's unencumbered interest in real estate. Equity is the difference between the home's fair market value and the unpaid principal balance of the mortgage and any liens. Equity increases as the mortgage is paid down and as the property appreciates in value. Back to top

Escrow -- An account in which a neutral third party holds the documents and money in a real-estate transfer until all conditions of a sale are met. Also, an account in which money for property taxes and insurance is held until paid; money is added to the account every time a mortgage payment is made. Back to top

Escrow analysis -- A periodic examination of an escrow account to make sure that enough money is being taken from mortgage payments to pay all taxes, insurance and assessments. Back to top

Estate -- All property one owns, including real estate, chattel and investments. Back to top

Exclusive listing -- A legal agreement that gives one real-estate agent the right to sell a property for a specified period. The owner retains the right to sell the property himself or herself without paying the agent a commission. Back to top

Fair Credit Reporting Act -- A federal law that governs what credit bureaus can report and for how long. It outlines procedures for correcting errors in credit reports. It requires credit bureaus to furnish copies of consumers' credit reports at their request. Back to top

Fair market value -- The price an item would sell for, assuming the buyer and seller both have reasonable knowledge of the item's worth and are not under pressure to buy or sell. In real estate, to determine fair market value it is common to compare other similar properties sold near the same time as your property. Also called true market value or current market value. Back to top

Fed -- Congress founded the Federal Reserve, the central bank of the United States, in 1913. It conducts the nation's monetary policy and regulates its banks in order to achieve a flexible and stable economy. The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate to serve 14-year terms. The chairman and the vice chairman of the board are named by the President from among the members and are confirmed by the Senate. They serve a term of four years. Back to top

Federal Discount Rate -- The interest rate at which an eligible financial institution may borrow funds directly from a Federal Reserve bank. Banks whose reserves dip below the reserve requirement set by the Federal Reserve's board of governors use that money to correct their shortage. The board of directors of each reserve bank sets the discount rate every 14 days. It's considered the last resort for banks, which usually borrow from each other. Back to top

Federal funds rate -- The interest rate at which banks and other depository institutions lend money to each other, usually on an overnight basis. The law requires banks to keep a certain percentage of their customer's money on reserve, where the banks earn no interest on it. Consequently, banks try to stay as close to the reserve limit as possible without going under it, lending money back and forth to maintain the proper level. Back to top

Federal Housing Administration (FHA) -- An agency within the federal Department of Housing and Urban Development that provides mortgage insurance and sets construction and underwriting standards. Back to top

Federal Reserve Board -- Congress founded the Federal Reserve, the central bank of the United States, in 1913. It conducts the nation's monetary policy and regulates its banks in order to achieve a flexible and stable economy. The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate to serve 14-year terms. The chairman of the Board of Governors is Alan Greenspan. The chairman and the vice chairman of the board are named by the president from among the members and are confirmed by the Senate. They serve a term of four years. Back to top

Federal Reserve System -- The central banking system for the United States, known as the "Fed," was established by the Federal Reserve Act of 1913 and serves as the nation's central bank, issuing the nation's currency, conducting monetary policy through the regulation of the money supply and the cost of credit, facilitating the clearing of checks, providing short-term credit to member banks through the discount rate, regulating bank operations, approving interstate bank mergers, supervising bank holding companies, and providing oversight to international banking operations. It includes a seven-member Federal Reserve Board of Governors, 12 Federal Reserve Districts each with a Federal Reserve Bank (and 24 branch offices), the decision-making Federal Open Market Committee (FOMC), and the Federal Advisory Council consisting of an elected member from each Federal Reserve District that makes recommendations to the Board of Governors on business and financial matters. Back to top

Federal Trade Commission -- A federal agency that enforces antitrust and consumer protection laws, including the Truth-in-Lending Act, Fair Credit Billing Act, Fair Credit Reporting Act, Equal Credit Opportunity Act, Fair Debt Collection Practices Act and Home Ownership and Equity Protection Act. Back to top

FHA loan -- A residential mortgage from an approved lender and insured by the Federal Housing Administration. The down payment on an FHA loan usually is less than that for a conventional mortgage. The FHA does not lend money, but nominates approved lenders. Back to top

Fiduciary -- An individual, company or association responsible for managing someone else's assets. Fiduciaries include executors of wills and estates, trustees, receivers in bankruptcy and those responsible for managing the finances of a minor. Back to top

First lien -- Primary claim by the lender for satisfaction of outstanding debt. A first mortgage creates a first lien. Back to top

First mortgage -- The primary home loan on a property, which has priority over all other claims to the title. Back to top

Fixed installment -- Periodic (usually monthly) payment on a loan whose sum does not vary. Back to top

Fixed-rate mortgage -- A home loan in which the interest rate will remain the same through the life of the loan. Back to top

Fixed-rate option -- An option available on some home equity lines of credit which allows borrowers to fix the payments and interest on a portion of their balance. Customers usually can exercise the option a handful of times during the lives of their loans, and they may pay a fee for the privilege. Back to top

Floor -- The minimum rate possible on a variable-rate loan or line of credit, after any initial introductory rate period. For example, on a credit card with the Prime rate as its index, no matter how low the Prime rate drops, the rate on the line may never decrease below the stated rate floor. Back to top

FNMA 30 year Mortgage Commitment delivery 60 days -- FNMA is the Federal National Mortgage Association, commonly known as Fannie Mae. It purchases Federal Home Administration, Veterans Affairs and conventional mortgages from primary lenders and sells them to investors. The index measures mortgage commitments for delivery within 30 to 60 days; that is the required net yield on mortgage loans that lenders sell to FNMA, which in turn sells them to investors. Back to top

Foreclosure -- The legal process by which a homeowner in default on a mortgage is deprived of interest in the property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Back to top

Full income verification -- A requirement for fully documented proof of income; loans of this type usually offer lower interest rates than no-income or "no-doc" verification loans. Back to top

Fully amortized adjustable-rate mortgage -- A home loan whose interest rate can change, and whose amount is fully paid at the end of the term. Back to top

Government National Mortgage Association -- Commonly known as Ginnie Mae, a part of the federal Department of Housing and Urban Development that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Back to top

Graduated-payment mortgage (GPM) -- A home loan that starts out with smaller payments that gradually increase over the first few years, then remain fixed. Back to top

Growing-equity mortgage -- A fixed-rate home loan in which payments are increased over a specified period, resulting in quicker payment of principal. Back to top

Guaranteed mortgage -- A home loan guaranteed by a government agency or other third party. Back to top

High-LTV equity loan -- A home equity loan that creates a total loan-to-value ratio of up to 125 percent or more. When the total principal of loans leaves homeowners with debt that exceeds the fair market value of the home, the interest paid on the portion of the loan above that value may not be tax deductible. Back to top

Home equity -- The part of a home's value that the mortgage borrower owns outright; the difference between the fair market value of the home and the principal balances of all mortgage loans. Back to top

Home equity conversion mortgage -- A special type of mortgage, sometimes called a reverse mortgage, that enables older homeowners to convert the equity in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans or mortgages, a borrower does not qualify on the basis of income but on the value of the home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Back to top

Home equity line of credit -- A home equity line of credit is an open-ended loan, paid as revolving debt, that is backed by the portion of the home's value that the borrower owns outright. Interest paid on a home equity line of credit is usually deductible. Back to top

Homeowners insurance -- A policy that includes hazard coverage, covering loss or damage to property, as well as coverage for personal liability and theft. Back to top

Household income -- The total income of all members of a household. An important yardstick used by lenders evaluating applications for joint credit. Back to top

Index -- A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable rate loans such as credit card debt. Some of the most common indices are: the one-year Treasury Constant Maturity Yield; the Federal Home Loan Bank (FHLB) 11th District Cost of Funds; prime rate as listed in the Wall Street Journal. Back to top

Initial interest rate -- The starting percentage a borrower pays for the use of money on an adjustable-rate mortgage. Back to top

Interest -- 1. Money paid for a borrower’s use of money, calculated as a percentage of the money borrowed and paid over a specified time. 2. A right to, or share of, title to property. Back to top

Interest rate -- The amount charged per year on a personal or home loan. The rate varies according to the type of loan. Or, the percentage of interest paid for money in deposit accounts, without regard to compounding, shown as an annual figure. Back to top

Interest rate buy-down plan -- A fixed-rate loan in which the borrower pays a fee for a lower rate in the first years (usually two years) of the loan. The rate later rises to its full fixed rate. Back to top

Interest rate cap -- A limit on how much a borrower’s percentage rate can increase or decrease at rate adjustment periods and over the life of the loan. Back to top

Joint credit -- Issued to a couple based on both of their assets, incomes and credit reports. It generally results in a higher credit limit, but makes both parties responsible for repaying the debt. Back to top

Jumbo mortgage -- A jumbo mortgage is a home loan that exceeds the limits set by Fannie Mae and Freddie Mac ($333,700 this year; $500,550 in Alaska, Hawaii and the U.S. Virgin Islands). A jumbo mortgage will carry a higher interest rate than a conventional mortgage. Back to top

Junior mortgage -- A home loan than is subordinate to the primary loan, or first mortgage. Back to top

Lease-purchase mortgage -- A financing option that allows a potential homebuyer to lease a property with the option to buy. Often constructed so the monthly rent payment covers the owner's first mortgage payment, plus an additional amount as a savings deposit to accumulate cash for a down payment. A seller may agree to a lease-purchase option if the housing market is saturated and the seller is having difficult selling the property. Back to top

Lien -- A legal claim against property for payment of a debt or for services rendered. One who holds a lien has the right to sell the property to obtain the money, or to recover the money when the property is sold. Valid liens are filed with county recorder's offices. Back to top

Lifetime rate cap -- In an adjustable rate mortgage (ARM), it limits the amount that the interest rate can increase or decrease over the life of the loan. Back to top

Line of credit -- A commitment by a financial institution to lend up to a specified maximum amount to a customer during a specified period of time. Back to top

Loan application -- A document in which a prospective borrower details his or her financial situation to qualify for a loan. Back to top

Loan term -- The period specified in the promissory note for a borrower to pay a loan, such as a mortgage. Most conventional mortgages have a loan term of 15 or 30 years. Back to top

Loan-to-value ratio (LTV) -- The percentage of the home's price that is paid for by a mortgage. On a $100,000 house, if the buyer makes a $20,000 down payment and borrows $80,000, the mortgage is 80 percent of the price of the house. Therefore, the loan-to-value ratio is 80. When refinancing a mortgage, the loan-to-value ratio is computed using the appraised value of the home, not the sale price. Back to top

Low-down mortgages -- Mortgages with a low down payment, usually less than 10 percent. Fannie Mae and Freddie Mac design loan programs that spell out a set of standards for lenders. In recent years these government-chartered agencies have made low-down mortgages more available through programs such as Fannie Mae's Flexible 97 and Freddie Mac's Alt 97. The "97" refers to the amount of the home's value a lender will cover in a mortgage, leaving a low 3 percent down payment required. Back to top

Market conditions -- Factors that affect the sales of homes in an area, such as interest rates, the unemployment rate, home appreciation, weather and time of year. Back to top

Market value -- The price at which a given property or product sells between a willing, unpressured buyer and seller who know all the pertinent facts about the property or product. Back to top

Maximum financing -- A mortgage made on a property in which the lender’s lowest permissible down payment has been made. Back to top

Monthly periodic rate -- The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12. See periodic rate. Back to top

Mortgage -- A legal agreement that uses property as collateral to secure payment of a debt. The legal agreement means that when a mortgage is on a house, the lender can take possession of the house if the borrower stops making payments. Back to top

Mortgage banker -- One who originates home loans, sells them to investors, services monthly payments and handles escrow. Some mortgage bankers sell their loans on the secondary market. Back to top

Mortgage broker -- One who finds lenders for prospective borrowers who meet the lenders’ criteria. A mortgage broker does not make the loan, but receives payment for services. Back to top

Mortgage refinance -- A refinanced mortgage is one in which a borrower pays off an old loan with a new loan. People who refinance a mortgage usually do so to get a lower interest rate, lower their payments or to take cash out of their equity. Back to top

Multifamily mortgage -- A loan to buy an apartment building in which the property is the collateral. Back to top

National bank -- A bank chartered by the federal government and a mandatory member of the Federal Reserve System. Back to top

Net worth -- The total value of all assets, such as house, car, furniture and investments, minus all debts, such as mortgages and credit card bills. Back to top

No cash-out refinance -- A home loan for a lower interest rate in an amount that does not exceed closing costs and the original mortgage’s outstanding principal. Back to top

No-documentation loan -- A mortgage in which the applicant provides a minimum of information -- name, address, Social Security number (so credit reports can be pulled), and contact information for an employer, if there is one. The underwriter decides on the loan based on the applicant's credit history, the appraised value of the house and size of down payment. Back to top

Nondischargeable debt -- A debt that cannot be eliminated in bankruptcy. Examples include some taxes and, usually, federally guaranteed education loans. Back to top

One-year adjustable -- Mortgage whose annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender. Back to top

Open-end credit -- A line of credit that may be used up to a set limit. Also called a charge account or revolving credit. Back to top

Periodic rate -- The interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day. Back to top

Personal loan -- A personal loan is a loan from a lender that is not secured by any property. Rates tend to be similar to those of credit cards, which are another type of unsecured loan. The personal loan rates quoted on Bankrate are for a $3,000 fixed-rate loan and a term of two years. Back to top

PMI -- Private mortgage insurance. A policy that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Although PMI protects the lender, it is paid monthly by the borrower. Private mortgage insurance usually is required if the down payment is less than 20 percent of the sale price. Back to top

Point -- A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate. Back to top

Portfolio lender -- A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market. Back to top

Prime rate -- The interest rate a bank charges its best or "prime" customers. Each bank will quote a prime lending rate. Many institutions quote prime rates established by large money center commercial banks. There is also a prime rate average listed in the Wall Street Journal that is an average of the largest commercial banks. The rate given to consumers on their loans is often based as the prime rate plus a certain percentage, which represents the lender's assessment of the risk in lending, plus its profit margin. Back to top

Qualifying ratios -- As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the front ratio, is the percentage of monthly before-tax income that goes toward a house payment. The back ratio is the sum of the house payment and all other monthly debt -- credit cards, car payments, student loans and the like -- divided by before-tax income. Back to top

Rate -- Percentage a borrower pays for the use of money, usually expressed as an annual percentage. Back to top

Rate index -- A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans. Back to top

Rate lock -- A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing. Back to top

Rate-improvement mortgage -- A home loan that allows the borrower a one-time interest rate cut without paying refinancing charges. Back to top

Refinancing -- The repayment of a mortgage with another mortgage. Homeowners typically refinance to take advantage of lower interest rates or to transform equity into cash. Back to top

Rehabilitation mortgage or rehab mortgage -- A home loan that provides money for the purchase and reconstruction or improvement of a property. Back to top

Restructured loan -- A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Back to top

Reverse mortgage -- A loan that allows an older homeowner to convert built-up equity into cash. The loan comes due when the owner dies, sells the house or moves out. Back to top

Revolving credit -- A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, checking account cash reserve or overdraft accounts that have pre-approved lines of credit. Back to top

Roll-in loans -- A refinancing loan that rolls any closing costs or fees into the loan. These programs best serve people who have a reasonable amount of home equity, want to reduce their overall interest expense, and plan to stay in their homes. Most refinance programs also cap the allowable LTV at 97 percent, which means some borrowers won't have the option of rolling their costs in no matter what. Back to top

Savings and Loan Association -- A state or federally-chartered depository financial institution that was primarily a provider of home mortgages but since deregulation in the 1980s to offer services similar to a commercial bank. Back to top

Second mortgage -- A loan using a home's equity as collateral and which is subordinate to the original mortgage (i.e., the first mortgage has priority before all others). Back to top

Shared-appreciation mortgage -- A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Back to top

Simple interest loan -- A method of allocating the monthly payment between interest and principal. The interest charged is determined by the unpaid principal balance on the loan, the interest rate, and the number of days since the last payment. The rest of the payment goes to the principal. Making early payments or additional payments will reduce the loan's principal and cut the total interest paid over the life of the loan. Back to top

Subprime borrower -- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments. Lenders often grade them based on the severity of past credit problems, with categories ranging from "A-" on down to "D" or lower. Back to top

Subprime mortgage -- A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report. Subprime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default. Back to top

Tax lien -- A claim, or obstacle, to the sale of property because of unpaid taxes. The property's title can't be transferred until liens are paid. Back to top

Term -- The time to the maturity of a loan or deposit, expressed in months or years. Back to top

The Fed -- Congress founded the Federal Reserve Board, the central bank of the United States, in 1913. It conducts the nation's monetary policy and regulates its banks in order to achieve a flexible and stable economy. The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate to serve 14-year terms. The chairman of the Board of Governors is Alan Greenspan. The chairman and the vice chairman of the board are named by the president from among the members and are confirmed by the Senate. They serve a term of four years. Back to top

Title -- Ownership of real property to the exclusion of anyone else's right to claim the property. Evidence of title is recorded in a deed and held in a county recorder's office. The terms "title" and "deed" often are used interchangably; strictly speaking, the deed is the document and the title is the ownership right that is recorded in the deed. Back to top

Two-step mortgage -- A home loan in which the interest rate stays the same for a period (often the first five or seven years), then changes to another interest rate for the remainder of the loan period. Back to top

Underwriting -- The process by which a lender decides whether to lend money, based on the value of the property, the borrower's credit history and any other relevant factors. Back to top

Unearned income -- Income such as interest, dividends, capital gains or rents, as opposed to earned income, such as wages, tips and salaries. Back to top

Unsecured loan -- An advance of money that is not secured by collateral. Back to top

Usurious rate -- A rate based on unnecessarily or unlawfully high interest; act or practice of lending money at high interest; sometimes intangible property taxes are applied to income from usurious rates. Back to top

VA loan -- A mortgage made by an approved lender and guaranteed by the Department of Veterans Affairs, often with a low down payment. Back to top

Variable interest rate -- Percentage that a borrower pays for the use of money, and which moves up or down periodically based on changes in other interest rates. Back to top

Variable-rate mortgage -- Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an adjustable-rate mortgage.Back to top

Wraparound mortgage -- A refinanced home loan in which the balances on all mortgages are combined into one loan. Back to top

Abandoned Calls - An abandoned call (sometimes known as a nuisance call) is a connect made by a dialer for which no agent is available, leading to abandonment of the call by the dialer. Back to top

ACD - ACD stands for Automatic Call Distributor. It started out life as a specialized telephone device whose primary function is to handle bulk inbound calls and intelligently route them to dedicated agents or services. Now frequently used for automating outbound calls as well. Back to top

Auto Attendants - Just as dialers may encounter a lot of answering machines in dialing consumers, so too will they encounter machines in dialing business numbers. These will include not just answering machines, but auto attendants as well.An auto attendant is a catch all definition for a device that answers a company's phones and allows a caller to select a service, dial an extension, leave a message or select a recorded announcement of the caller's choice. Back to top

Auto Preview - This dialing method, which is often called auto dialing, is the same as simple preview, but with the norm being that no discretionary time is allowed for the agent to preview screen-popped details, i.e. to do open preview. Nevertheless the open preview state is often used for at least some agents on a campaign, no matter what the dialing method. Historically, dialing, script and database management in this dialing method has been done on a standalone PC. Some of these functions have now shifted, or are shared with ACDs and networked servers, but the principle of one line dialed per agent, and no pooling of call outcomes remains. Back to top

Call Progress Monitoring - Dialers, including voice modem cards in PCs will listen in on a call that they have dialed, and once they get a response, will attempt to detect and screen out most call outcomes that are not live calls. You will often find this term used as if it applies to the detection and screening process only, whereas it is both this, as well as the time leading up to it when the dialer is waiting for a network response. Back to top

Campaign - A campaign consists of a calling list of telephone numbers to be called by a group of agents in a call center. For dialing methods other than manual, scripting aids and screen-popped data specific to each number will assist the agent to have a productive conversation, when a live call is made. Back to top

Connects - The term connects is sometimes used to refer to all calls that are put through to an agent. Some answering machines may be detected by a dialer and thus be non-connects, and some will reach an agent and thus be connects. And in the case of a manual agent all calls will be connects, i.e. connected to the agent, leaving the agent to detect and terminate all outcomes, other than live calls. Back to top

Dialer - Historically the term has meant just standalone predictive and power dialers, or autodialers connected directly to the PSTN. Outbound dialing and call outcome detection are increasingly becoming integrated into company networks where software applications and ACDs talk to each other, and the term dialer covers these situations as well. Back to top

Dialing Cycle - The dialing cycle is the period of time from when an agent or a dialer begins to dial a number, until a result is achieved. A result will be either a live call, or a decision by either the agent or a dialer to terminate the call and free up resources to dial another number. Back to top

Dialing Rules - Rules governing outbound activities differ considerably amongst countries. In some countries e.g. Germany, business to consumer calling is not permitted at all, without the prior consent of the called party. In other countries e.g. The USA and the UK, prior consent is not required, but those who don't want to be called, can ask to have their details recorded in "don't call" lists. In the USA this arrangement is covered by Federal legislation (the Telephone Consumer Protection Act); in the UK it is code of practice only, laid down by the UK Direct Marketing Association (DMA). Back to top

Manual Dialing - The agent shuffles his papers to find the next record and presses the buttons when he wants to dial the telephone number for it. Also referred to as "hard dialing". Back to top

Open Preview - The agent is previewing, but dialing has not yet commenced. Open preview is the normal dialing state for the simple preview dialing method, and often for manual as well. In fact, expect all dialing methods to provide for some numbers to be dialed in this mode, where the data for the called party needs to be previewed for an indeterminate length of time, before a call is attempted. Back to top

Power Dialing - Traditionally the users who have bought power dialers and predictive dialers have both come from the same kind of camp, namely automated call centers, where all of the dialing is initiated and controlled by the dialer, and the dialer can dial on two or more trunks for each agent available to take a call. Hence the industry tendency to use the terms power dialing and predictive dialing interchangeably. True predictive dialers monitor literally everything that is going on in determining the optimum dialing rate at any point in time. Power dialers don't. They use very simple algorithms to determine the degree of overdialing; such as the reciprocal of the sum of one or more call outcome percentages. This approach has given very high talk times, and low wait times, but it has also sometimes meant lots of abandoned calls, because of the simplicity of the algorithms being used. Back to top

Predial - A predial algorithm looks at the progress of a call through both its talk and wrap stages, and dials one or more numbers in anticipation of the agent becoming available to take another call. This algorithm is used extensively by telemarketing and scripting products which don't have access to the overdial algorithms of predictive dialers. In a world of fast call setup and network response, the benefit to be gained from predial is limited. Back to top

Progressive Dialing - The term progressive dialing was coined to describe what happens when a predial algorithm is implemented for either individual agents, or groups of agents. No more, no less. But since this kind of dialing algorithm can be used by other dialing methods as well such as this one, rather than talk about the progressive algorithms in predictive dialing, which might be confusing, we have coined the term "predial" to describe this kind of algorithm. Back to top

Scripting - Scripting systems are essentially online help dialogs that guide an agent's responses in a live call. For example, if a called party says that they can't talk now, and could the agent phone back later, a script might give the agent a number of responses to select from in reply, perhaps including "it'll only take a minute of your time." Back to top

Wait - Traditionally wait is defined as measuring the time from when an agent becomes available to take another call, to when a call is connected to him. Connects to agents may be any kind of call outcome in the case of manual dialing; otherwise they will depend on the extent of dialer detection being done. If no answering machine detection is being used, and there is a high proportion of answering machines among call outcomes on a predictive campaign, the dialer will (should!) increase its dialing rate to allow for what is effectively a high proportion of short talks, and the wait time between all call outcomes should fall as a result. Back to top

Aspect Ratio - The dimension of a mailpiece expressed as a ratio of height to length. Back to top

Bangtail - That little piece of paper on the back of an envelope that gets removed via perforation and is another opportunity to get your advertising
message seen. Commonly seen on credit card envelopes that are included with your monthly invoice. Back to top

Barcode - A series of vertical full bars and half bars representing ZIP Code information relative to the address on the mailpiece. Back to top

Barcode Read Area - The clear zone on the lower right corner of an envelope that must be kept free of printing and symbols except for the barcode itself. Back to top

Basis Weight - The weight in pounds of a ream (500 sheets) of paper cut to a specific standard size for that grade. Back to top

BMC (bulk mail center) - A highly mechanized mail processing plant that distributes Standard Mail and Periodicals. Back to top

BRC - Business Reply Card. Back to top

BRE - Business Reply Envelope. Back to top

Break-Even Point - The minimum number of sales a Direct Mail campaign must generate in order for the direct marketer to recover associated costs of the campaign. Back to top

Buckslip - A single sheet of paper inserted in a Direct Mail piece that's usually used to deliver another offer within the package. Back to top

Bursting - The process of separating continuous forms. Back to top

Cheshire - Label - These types of labels look like normal white computer paper but a special machine, called the Cheshire machine can cut this paper into label sized strips (usually 3 5/16" x 1") and glue them onto mailing pieces. Back to top

Cleaned List - One that is free of duplication and unwanted names/addresses. Back to top

Collate - To put together a number of inserts or pieces of paper for a purpose. Such as collating 10 pages together, so as you can staple them. Back to top

Courtesy Reply Mail (CRM) - A preprinted return envelope or card provided as a courtesy to consumers. Customers responding to the original mailing pay the return postage. Back to top

Data Entry - Entering names and addresses into a computer one at a time from printed or hand written material. Back to top

Database - Can be as simple as a card file; a collection of information stored in a computer medium that can be easily accessed and manipulated. Back to top

DBMC (destination bulk mail center) rate - A discounted rate the Postal Service offers for mail that is properly prepared and entered at the BMC that serves the delivery address on the mail. Back to top

DDU (destination delivery unit) rate - A discounted rate the Postal Service offers for mail that is properly prepared and entered at the delivery unit that serves the delivery address on the mail. Back to top

Delivery Barcode Sorter (DBCS) - A small, multilevel, high-speed barcode sorter that finalizes letter mail sortation to the carrier sector/segment level using a two-pass operation to sort up to 34,000 pieces an hour. Back to top

Delivery Point Barcode (DPBC) - A ZIP+4 barcode containing two additional digits (represented by 10 additional bars) that designate a specific delivery point. Back to top

Demographics - Those characteristics that define a particular group of people, including HHI, age, education level, family size, etc. Back to top

Domestic Mail Manual (DMM) - The Postal Service manual containing most regulations for domestic mail services. Back to top

DPBC (delivery point barcode) - A POSTNET bar-code that consists of 62 bars denoting the 9-digit zip code and the first 2-digits of the primary street address. Back to top

DSCF (destination sectional center facility) rate - A discounted rate the Postal Service offers for mail that is properly prepared and entered at the SCF that serves the delivery address on the mail. Back to top

Em Height - A unit of measure exactly as high as the point size of the type being set. In 12-point type, the em height is 12 points high. Back to top

Em Space - A unit of measure exactly as wide as the point size of the type being set. In 12-point type, the em space is 12 points wide. Back to top

Facing Identification Mark (FIM) - A pattern of vertical bars printed in the upper right portion of the mailpiece just to the left of the indicia, used to identify business reply mail and certain other bar-coded mail. The FIM is an orientation mark for automated facing and canceling equipment. Back to top

Font - The collection of all letters, numbers, punctuation marks, etc. within a certain size and style. Back to top

FPO - Fleet post office (Navy & Marine Corps). Back to top

Fulfillment House - A company specializing in responding to and tracking orders sold through Direct Mail. Back to top

Gate Fold - A type of fold where both sides of a piece get folded inward so the edges come together. Back to top

Halftone - The reproduction of continuous-tone artwork, such as a photograph, though a crossline or contract screen, which converts the image into dots of various sizes for printing. Back to top

HHI - Household income. Back to top

Insert - Any item, such as a brochure or pamphlet, that is placed in a Direct Mail package. Back to top

International Mail Manual (IMM) - The Postal Service manual containing most regulations for international mail services. Back to top

Johnson Box - The top part of the letter, set above the body of the letter, that states the main message of the offer in a compelling way; the letter's "headline." Back to top

Laser Clear - Labels - See Laser labels, except these are translucent in appearance. Back to top

Laser White - Labels - Laser labels are also known as pressure sensitive sheet fed labels. Basically, the labels peel off a backing and stick onto another surface, and each sheet of labels is independent of each other. Back to top

Layout - The arrangement of text blocks, headlines and graphics on a page. Back to top

Letter Fold Writing In - Piece is folded inwards from both sides in such a way so that they overlap each other. When completed the writing of the front page is folded facing inwards. Back to top

Letter Fold Writing Out - Piece is folded inwards from both sides in such a way so that they overlap each other. When completed the writing of the front page is folded facing outwards. Back to top

Lettershop - A company that personalizes, labels, sorts and stuffs envelopes in preparation for Standard Mail A®. Back to top

Lift note - A folded sheet that is a "last chance" to deliver an advertising message. Usually written by a person other than the main writer of the letter. Good place for a testimonial. Back to top

List broker - An individual or company that brings together owners of lists and the Direct Mailers who use them. Back to top

List compiler - An individual or company that specializes in gathering names, addresses and information from a variety of sources to produce a customized list of prospective customers. Back to top

Live stamp/live postage - A "normal" stamp which a consumer would use, as opposed to metered mailings. Back to top

Mail processing barcode sorter (MPBCS) - A machine that sorts between 32,000 and 37,000 letter mailpieces an hour according to barcodes previously applied to the mailpieces. Back to top

Matching - The process of keeping together a unique insert to the addressee that goes with at least one other unique insert in the same package, or a unique insert to the addressee that goes with the address information located on the outside of the package. For example a personalized letter that needs to be matched with the address displayed on the outside of the envelope. Back to top

Mechanical - A term for a camera-ready paste-up of artwork. It includes type, photos, line art, etc., all on one piece of artboard. Back to top

Merge - The process of combining two or more lists into a single one using the same sequential order, then sorting them together, usually by ZIP Code®. Back to top

Merge/Purge - The process of combining more than one data file and deleting out the duplicate entries. Back to top

Multiline optical character reader (MLOCR) - a machine that scans ("reads") an entire address block on mail, translates the address into a corresponding barcode, sprays the barcode onto the mail, then sorts the mail to an appropriate stacker with a throwout of 30,000 to 37,000 pieces an hour, depending on the type of mail. Back to top

Nanometer (nm) - A unit of wavelength (when applied to light) of 10 X-9 meters (1 billionth of a meter). Back to top

Nest - To place a piece inside a part or all of another piece. Back to top

Examples:
• To place a card with directions inside an invitation.
• To place a reply card inside the flap of a reply envelope.
• When a multi-page letter needs to be folded together as one, often a mailhouse will z-fold the letters individually and hand put them together. Then the entire letter can be inserted as one multi-paged document. The process of putting the letters together would be nesting.

OCR (optical character reader) - A computerized mail processing machine that scans addresses on mail and applies the proper barcode. Back to top

OE (outer envelope) - The envelope that your package will be delivered in. Usually, a "teaser" line is on the front to entice the recipient to open your letter. Back to top

Overs (or overruns) - The portion of a print run that exceeds the quantity specified in the purchase order. Back to top

Permit/Indecia - This is an authorization stamp issued by the post office that allows mailers to not affix postage, and instead have the post office debit from their postage account. Back to top

An example of this is:
First Class
U.S. Postage
Paid
[Company Name]

Personalized Laser Letter - A document printed from a laser printer where each page has some form of personalization such that each one is unique. Back to top

POSTNET (postal numeric encoding technique) - The barcode system for encoding the delivery point information and 9-digit zip code information on letter-size and flat-size mailpieces. Back to top

Precancelled Stamps - Stamps cancelled by printing across the face before they are sold to mailers. Back to top

Premium - A free gift sent to a potential customer either with the mail piece (front-end) or after the prospect has responded (back-end). Back to top

Prepress Proofs - Also known as "off-press proofs." these are made by photomechanical or digital means in less time and at lower cost than press. Back to top

Presorting - The process by which a mailer prepares mail so that is sorted down to the finest extent required by the Post Office. Back to top

Pressure Sensitive Continuous Feed - Labels - Pressure sensitive type labels, peel off a backing and stick onto another surface, such as a mail piece. Continuous feed means the label pages are attached to each other and are fed through the printer by pin holes. Back to top

Purge - The process of eliminating duplicates and/or unwanted names from one or more lists. Back to top

Quarter-fold - A type of fold where a piece gets folded in half, and then in half again. Both folds are in the same direction. Back to top

RFM (recency/frequency/monetary) - A key formula used with most databases. It lets direct marketers know the recency and frequency of purchasing, and the amount of money spent by the people in their database. Back to top

Right Angle Fold - A type of fold where a mailpiece gets folded in one direction, and then in another direction. Eg. a 17 x 11 piece getting folded in half to 8 ½ x 11 then folded in half (or in thirds), but in the opposite direction, so that the finished size is 8 ½ x 5 ½ (or 8 ½ x 3 2/3). Back to top

Roll Fold - A type of fold where one side of a piece gets folded inward and then folded inward again at least once more, like you are rolling a piece up. Back to top

Saddle Stitching - Stapling a publication from the back to the center. Back to top

SCF (sectional center facility) - A postal facility that serves as the processing and distribution center for post offices in a designated geographic area. Back to top

Self-Mailer - A mailpiece that mails without the use of an envelope. An example of this is an 8 ½ x 11 sheet tri-folded, addressed and mailed by itself. Back to top

Service Bureau - A company specializing in such computer services as mail list management and merge/purge operations. Back to top

Sorting - In Direct Mail, the arrangement of pieces in a bulk mailing by ZIP Code® to facilitate processing and more reliable delivery. Back to top

Standard Mail A® - Formerly known as "Third Class" or "Bulk" mail. Back to top

Suppress - Using information on one or more lists to remove duplication of specific names before a mailing, or to eliminate those undesirable names. Back to top

Tri-fold - A type of fold where the sides of a piece both get folded inward, usually one third of the length of the piece. Back to top

Typesetter - An individual or company that generates high-resolution text and graphics. The typesetter can produce the high-quality output needed to produce professional-looking printed matter. Back to top

Web Press - A press that prints on rolls (or webs) of paper instead of single sheets. Back to top

White Space - Areas on a page that have no printing on them. Back to top

Wide Area BarcodeReader (WABCR) - A modification to the mail processing barcode sorter that permits the machine to find and "read" a barcode virtually anywhere on a mailpiece. Back to top

Window Envelopes - Envelopes having an opening through which an address printed on an insert is visible. Back to top

Z-Fold - Piece is folded inwards once and outwards once, like in the shape of a Z. Back to top

ZIP (Zone Improvement Plan) Code - Established in 1963, the system of 5-digit codes that identifies the individual post office or metropolitan area delivery station associated with an address. Back to top

ZIP +4 - A nine-digit numeric code incorporating the original five-digit ZIP Code, a hyphen, and four additional digits. The first five digits identify the delivery office. The four-digit add-on identifies a specific delivery segment such as a city block face, a floor of a building, a department from within a firm, or a group of post office boxes. Back to top

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