Mortgage & Loan Terminology

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |

A

Automated Clearinghouse (ACH)

An electronic funds transfer network that enables direct money transfers between participating bank accounts and mutual funds or variable annuity investments.

(ARM) Adjustable Rate Mortgage

A mortgage loan in which the interest rate is subject to periodic adjustment up or down according to the movement of a pre-arranged index.

Affiliate

An organization that is a parent or subsidiary of another organization or a subsidiary of a common parent. An organization may be an affiliate of another because of ownership, overlapping officers and directors, or other factors.

Aggressive Growth Fund

An investment portfolio that seeks maximum growth by investing in stocks believed to have above-average growth potential, often those of small- or mid-sized companies. These investments can be extremely volatile, especially over short periods of time.

Amortization

The repayment of a loan by making systematic payments that are applied to the loan's principal and interest over a set time period.

(APR) Annual Percentage Rate

The annual cost to a borrower of consumer credit that has been calculated according to certain consumer laws.

Annual Percentage Yield (APY)

A percentage rate reflecting the amount of interest a savings account would earn over a one-year period at a given interest rate — if all interest and principal were left in the account to compound.

Annual Percentage Yield Earned (Checking)

For checking accounts that receive monthly statements, a percentage rate that reflects the amount of interest actually earned and the average daily balance during the period.

Annuitant

The person during whose lifetime an annuity is payable. This is usually the person who receives the payments from an annuity.

Asset Allocation

A financial strategy that spreads an investor's assets across a number of different investment categories, such as domestic and foreign stocks, bonds and cash. Diversification has the potential to reduce overall investment risk.

Assumable Loan

A mortgage loan that, by its terms, permits its obligations to be taken over (assumed) by a new owner of the real property who is not the original borrower.

Assumption of Mortgage

An agreement by someone other than the original borrower to assume the obligations of a mortgage loan.

Automatic Investment Plan

This service allows investors to invest automatically, by transferring money from bank or brokerage accounts at regular intervals.

Average Annual Total Return

For a mutual fund, the average annual profit or loss realized by a fund at the end of a specified calendar period, assuming all dividends and capital gains are reinvested, stated as the percentage gained or lost per dollar invested.

Average Maturity

Bond investors can average the maturity dates of a portfolio's debt securities to come up with the portfolio's average maturity. Generally, the longer the average maturity, the greater the portfolio's sensitivity to interest-rate changes, which means more price fluctuation.

B

Balance - Available

The amount of money that can be withdrawn from a savings or checking account without any limitation. The available balance does not include funds on hold or interest not yet posted.

Balance - Current

The amount of money in a savings or checking account, including funds on hold but excluding unposted interest.

Balanced Fund

A fund that seeks both growth and income by investing in a combination of stocks and bonds. These portfolios may offer less growth potential, but they also tend to be less volatile than portfolios that invest only in stocks.

Bank Insurance Fund (BIF)

One of the two separate FDIC deposit insurance funds generally covering insured deposits in banks and certain savings institutions.

Basis Point

One one-hundredth of one percentage point (0.01%)

Bear Market

A prolonged period of falling securities prices.

Beneficiary

A person for whose use and benefit property is held by another, such as by a trustee or an executor.

Biweekly Payment Mortgage (Equity Builder ARM)

A mortgage that features a bi-weekly payment that is approximately equal to about one-half of a regular monthly payment. The payments are then made 26 times a year, as opposed to 12 monthly full payments. Borrowers can save considerable interest over the life of the loan and can pay off the principal years earlier than a borrower making single monthly payments.

Blue Chip Stock

The nickname for a nationally known, publicly traded company that typically has a long record of profit growth and dividend payment and a reputation for quality management, products and services.

Bond Ratings

Assessments of the financial strength of a bond issuer. Rating agencies like Moody's or Standard & Poor's assign a particular ranking — from top-quality AAA to below investment grade D — to indicate the bond issuer's creditworthiness. Lower-rated bonds tend to pay higher interest rates.

Bond

A debt security that obligates the issuer to pay the bondholder a stated rate of interest over a fixed period of time and repay the principal amount of the security at maturity.

Bull Market

A prolonged period of rising securities prices.

C

Capital Appreciation

When the value of an investment increases, this is "appreciation." Capital appreciation is the investment objective of growth-oriented mutual funds.

Capital Gain or Loss

The difference between how much you paid for an investment and how much you sold it for.

Capital Gains Distribution

Profits distributed to shareholders resulting from the sale of securities held in a portfolio for more than one year.

Cash Out

The cash that a borrower can receive upon refinancing all existing loans against a property with a new loan or loans that is greater than the amount needed to pay off the existing loans.

(CD) Certificate of Deposit

A savings account that pays a stated interest rate on a fixed principal amount over a specified period of time.

(CODI) Certificates of Deposit Index

The average of the 12 most recent monthly yields on 3-month certificates of deposit (CDs). The 3-month CD yields we use are published under "CDs (secondary market)" in the Federal Reserve's H.15 Statistical Release

Closing Costs

The expenses involved in completing a real estate loan transaction. Among them can be survey charges, title searches, insurance premiums and filing fees.

Common Stock

Stock represents partial ownership of a public corporation. A share of common stock typically carries voting rights and may pay dividends

Compounding Investment Earnings

Earnings on an investment's earnings. Over time compounding can produce significant growth in the value of an investment.

Compounding Interest

The process of reinvesting interest to earn additional interest. The more frequent the compounding, the more you earn.

Confirm

Whenever you buy or sell an investment, you should receive confirmation, or a "confirm," that acknowledges and reports the details of your transaction.

(CPI) Consumer Price Index

An economic gauge that tracks changes in consumer prices for a fixed number of goods and services, including housing costs, food, transportation and electricity. The CPI is generally used to measure inflation at the retail level.

Conventional Mortgage

A mortgage that is not obtained under a federal government insured program, such as the Federal Housing Authority, (FHA) or the Veterans Administration (VA), but which meets other standard requirements.

(COFI) Cost of Funds Index

Monthly weighted average cost of funds for savings institutions that are members of the Federal Home Loan Bank System Eleventh District (San Francisco). COFI consists of the monthly weighted average cost to Bank members of savings, borrowings and advances

(COSI) Cost of Savings Index

World Savings receives money from consumers in the form of deposits and lends money as home or other loans. The interest rates in effect on these deposits are the basis for the COSI index. It is not based on actual interest paid, but rather the weighted annualized average of all interest rates in effect on World Savings deposit accounts on the last day of each month.

Coupon Rate

This is another term for the interest rate on a bond.

Credit

With savings or checking accounts, an amount added to a savings or checking account balance, either through deposits or interest earned over time. In other cases, "credit" is another name for a loan.

Cumulative Total Return

A measure of the total increase in the value of an investment over time, assuming dividends and capital gains distributions are reinvested.

D

Daily Interest

Interest computed or assessed daily and based on the principal and interest left in the account each day.

Debit

With a savings or checking account, an amount withdrawn or removed from the account balance.

Debit Card

A plastic card that may be used for purchasing goods and services or obtaining cash by drawing from existing funds in a checking account. It is also known as a Check Card.

Deed

A legal document that transfers some interest in real estate or other property.

Deed of Trust

A legal document, used in some states in place of a mortgage, to secure a lien on a property.

Deferred Interest

Interest is deferred on an ARM when a minimum monthly payment is not large enough to pay all the interest that has accrued on the loan for that period. The unpaid interest is added to the outstanding principal balance to be repaid over the remaining life of the loan. To avoid deferred interest, a borrower sometimes has the option of making a larger payment that includes what would otherwise become deferred interest.

Diversification

Spreading your assets among a wide variety of investments — stocks, bonds, cash or real estate, for example — thus reducing the impact of any one asset on the performance of your overall portfolio.

Dividend

Stock investors may receive payments distributed by a company on a per-share basis. Mutual fund shareholders may be paid dividends from the income generated by the fund's investments.

Dollar Cost Averaging

An investment strategy whereby you invest the same amount of money at regular intervals, regardless of share price. Dollar cost averaging allows you to buy more shares when prices are lower and fewer when prices are higher, smoothing out fluctuations of the stock market. Remember, however, that this plan does not guarantee a profit or protect against loss and requires investors to determine whether they can continue to invest over the long term.

Double Tax-Free Income

Income that is exempt from both federal and state income taxes.

Dow Jones Industrial Average (DJIA)

The average of the stock prices of 30 U.S. industrial companies. This number is popularly viewed as a principal stock market indicator.

E

Earnings Per Share

The amount of a company's after-tax earnings divided by the number of shares outstanding. If a company earned one million dollars and had ten million shares outstanding, earnings per share would be ten cents.

Electronic Funds Transfer (EFT)

A transfer of funds that is initiated through electronic means and results in a financial institution debiting or crediting an account.

Equity

In terms of real property, equity is the difference between the outstanding balance on all the loans secured by the property and the property's fair market value.

Equity Fund

In the case of mutual funds, this is a portfolio that invests primarily in stocks.

(ELOC) Equity Line of Credit

Equity Line of Credit is a 30-year loan that lets you convert equity in your home to cash.

Escheat

The transfer to a state of certain money and property after a period of time in which they are left unclaimed by the owner.

Escrow Account (Impound Account)

In connection with loans secured by real estate, an escrow account is an account that a borrower pays into at the same time the borrower pays his or her loan payment, and from which the lender makes tax and insurance payments applicable to the borrower.

Escrow Analysis

An annual review of escrow accounts to determine if current monthly deposits continue to provide the required funds to pay taxes, insurance payments, or both, as they come due.

Ex-Dividend Date

The day that dividends and capital gains are distributed to mutual fund shareholders of record. Shares purchased on the ex-dividend date will not receive the current dividend.

Expense Ratio

How much it costs a mutual fund or variable annuity sub-account to conduct business, as a percent of its assets. Expense ratios can be found in prospectuses.

F

Family of Funds

Groups of mutual funds managed by the same company are sometimes referred to as a "fund family." Owning a number of funds within the same family often can make it easier to switch money among funds.

(FDIC) Federal Deposit Insurance Corporation

A government-owned corporation that insures deposits at all federal and some state-chartered banks, savings associations, and industrial loan companies. Deposit insurance is financed by a fee paid by the insured institutions.

(Freddie Mac - FHLMC) Federal Home Loan Mortgage Corporation

A privately owned for-profit corporation that purchases home mortgage loans from lenders, and uses the loans to create mortgage-backed securities for sale to investors.

(Fannie Mae - FNMA) Federal National Mortgage Association

A privately owned for-profit corporation that purchases home mortgage loans from lenders, and uses the loans to create mortgage-backed securities for sale to investors. In order to be sold to FNMA, loans must meet FNMA standards to qualify for Fannie Mae Interest rates.

Federal Reserve Board

A seven-member governing body of the Federal Reserve System appointed by the President for 14-year terms. The Board plays an important role in determining the country's monetary policy, which, in turn, can influence economic activity.

15-Year Payment Plan

A loan payment option that ensures payments large enough to cover all interest due and extra principal to pay off your loan based on a 15-year term.

Financial Statement

A written account of a firm's operations that often indicates the financial health of a company. It's comprised of an income (or profit and loss) statement and a statement of financial condition indicating the firm's assets, liabilities and net worth.

First Mortgage (or First Deed of Trust)

In order to protect the rights of the lender and the borrower, liens on real estate are usually recorded in the county where the property is located. A deed of trust or mortgage typically becomes a lien against the property when it is recorded, and this record typically establishes the priority of liens if the property is sold for any reason. The loan with first rights is the First Deed of Trust or First Mortgage.

Fixed Annuity

An insurance contract that offers tax-deferred earnings growth and guarantees fixed payments, either for life or for a specified period, to an annuitant. A fixed annuity usually accrues interest at a fixed or company-declared rate over a specific period.

Fixed Rate Mortgage

A mortgage loan in which the interest rate does not change.

Flexible Premium Annuity

An annuity that permits additional premium payments into the contract after the original purchase.

Full Interest Payment

A loan payment option that satisfies the minimum amount and all regular monthly interest due.

Full Principal and Interest Payment

A loan payment option that includes all the interest due and reduces your principal.

G

Global Fund

A portfolio that buys securities of companies headquartered anywhere in the world, including the U.S., as opposed to an international fund, which invests only in securities of corporations based outside of the U.S.

Government National Mortgage Association (Ginnie Mae - GNMA)

A government-owned corporation that guarantees privately issued mortgage-backed securities.

Grace Period

A specified period (usually 10 or 15 days) after a regular loan payment due date during which no late charge or other penalty is assessed.

Growth Stock

Stock of a corporation that has exhibited faster-than-average gains in earnings over the last few years and which analysts expect to continue to show high levels of profit growth.

H

Hazard Insurance (Homeowner's Insurance)

Insurance that protects homeowners against loss to real estate caused by fire, specified natural causes and other causes of property loss or damage.

I

Income Fund

In the case of mutual funds, this is an investment portfolio that emphasizes securities that pay current income. Bond funds are considered income funds.

Index

A way of measuring some aspect of economic activity. For example, interest rates on adjustable rate loans change in accordance with changes in certain index values.

Index Fund

A mutual fund that seeks to parallel the performance of a market index. Index funds are designed to take advantage of the average long-term growth of the market segment tracked by the index rather than attempting to beat the market. The cost of managing an index fund is usually less than managing other types of funds that require more frequent trading.

(IRA) Individual Retirement Account

A tax-deferred account that allows individuals to contribute a maximum of $2,000 per year toward retirement. Since the investments are not taxed, they can grow more rapidly and benefit from the power of compounding until they are withdrawn. IRA contributions may be fully or partially tax deductible. For a comparison of four types of IRAs offered by Atlas, go to Individual Retirement Accounts.

Installment Debt

A debt or loan that is repaid in successive payments over a period of time. For purposes of a World Savings real estate loan application, examples of consumer installment debt include car, boat, student loan and private (unsecured) loan payments.

International Fund

A portfolio that buys securities of companies headquartered outside of the U.S., as opposed to global funds which invest in securities of both U.S. and foreign corporations.

Interest

For savings and checking accounts, interest is the payment by a financial institution to customers for the use of their funds. For loans, interest is what a borrower pays a lender over and above the amount of the loan, for the use of the money.

Interest Rate

For savings and checking accounts, the annual rate of interest paid on an account, which does not reflect compounding. For loans, a percentage that is applied to the amount of a loan to determine the charges for the use of the money.

Interest Rate Cap

In most cases, the maximum rate of interest that may be charged on an adjustable rate mortgage loan over the life of the loan.

Investment Grade Bond

A bond with one of the top four credit ratings (AAA, AA, A, BBB) of independent bond-rating agencies, like Moody's or Standard & Poor's.

Irrevocable Trust

A type of trust in which the grantor gives up rights to amend or terminate the trust.

J

Junk Bond

A bond with a credit rating of BB or lower as determined by rating agencies. These low-rated bonds often offer higher interest rates because of their higher risk of default. Junk bonds are often referred to as high-yield bonds.

K

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L

Lien

A right in real property that secures a debt or other obligation. A lien can secure a loan or another claim against the property, such as taxes.

Living Trust

A trust created and operating during a grantor's lifetime.

Load Fund

A mutual fund that sells shares at a price that includes sales charges or commissions.

Loan Terms

The conditions that specify how a loan will be repaid and a borrower's obligations until the loan is repaid. Some common loan terms include interest rate, fees charged and the length of the loan.

(LTV) Loan-to-Value Ratio

The ratio determined by dividing the balance of a mortgage loan by the appraised value of the real estate. For instance, if the balance on a mortgage loan is $80,000 and the appraised value of a home is $100,000, the LTV is 80%.

Long-Term Bonds

Generally, bonds with maturities in excess of ten years. They usually pay investors higher yields than shorter-term bonds, but they tend to be more sensitive to interest-rate changes.

Long-Term Gain or Loss

For tax purposes, the gain or loss on the sale or exchange of an asset held for more than twelve months.

M

Management Company

A firm that organizes, oversees and administers a mutual fund or variable annuity investment portfolio.

Management Fee

The compensation that mutual fund companies charge investors for expenses incurred in managing the fund. Management fees must be disclosed in a fund's prospectus.

Margin

On an adjustable rate loan, the amount a lender adds to the index in order to determine the mortgage interest rate at each adjustment period. For example, if the index is at 5.0, and the margin is 1.5, the interest rate is 6.5%.

Market Capitalization

In the securities industry, the value of a company determined by multiplying the number of outstanding shares by the current market price per share.

Market Timing

A stock market investment strategy that's based on trying to predict market cycles. The goal is to buy before share prices rise and sell before they fall.

Maturity Date

In the case of securities, the day on which the principal amount of a bond or other dated debt security is to be repaid in full. In the case of mortgage loans, the date on which the outstanding balance of the loan must be paid in full. In the case of savings, the first date following the account term, on which a certificate of deposit may be renewed or withdrawn without penalty (see Bond, Certificate of Deposit, Mortgage Loan).

Minimum Amount Due

A loan payment option that covers the minimum amount due monthly. With many of World's adjustable rate loans, when you choose to pay the minimum amount due option, your payment may not always cover the total interest due. This unpaid portion is called "deferred interest," which is added to your loan balance. Other loan payment options do not provide for deferred interest.

Money Market Account

A checking account that earns interest generally comparable to Money Market Funds, although the rates paid by any particular bank may be higher or lower.

Money Market Fund

Mutual funds that are designed to seek current income and remain stable by investing in short-term, relatively liquid assets, such as treasury bills, certificates of deposit and bonds or notes with remaining maturities of thirteen months or less.

Monthly Housing Expense

For purposes of a World Savings real estate loan application, the sum of all monthly payments of principal and interest on all mortgages (including home equity loans and equity lines of credit) secured by owner-occupied residential property, plus monthly property tax and insurance payments or accruals, plus any homeowners' association dues or fees applicable to that property.

Monthly Payments on Rental Property

For purposes of a World Savings real estate loan application, the sum of all monthly payments of principal and interest on all mortgages (including subordinate mortgages and secured lines of credit) held on non-owner-occupied properties, plus monthly payments or accruals for property taxes, hazard insurance and mortgage insurance, but NOT including normal maintenance fees, utilities or repairs.

Mortgage

A legal document that pledges real estate as security for repayment of a loan or other obligation.

(MI) Mortgage Insurance

Insurance written by an insurance company that is designed to protect the mortgage lender against a potential loan default. It is usually required for loans with a loan-to-value (LTV) ratio greater than 80%.

Mortgage Loan

A loan whose repayment is secured by a lien against real property.

Municipal Bond

A debt security issued by state or local governments to help finance operations or special projects, like building schools, road construction, and water and sewer projects. "Muni" bonds are attractive to investors, because the income they generate is usually exempt from income taxes.

Mutual Fund

An investment company that pools the money of many investors who share common or "mutual" investing goals in order to invest in securities, such as stocks, bonds or money market instruments. Mutual fund advantages typically include low-cost diversification and professional management.

N

Net Asset Value (NAV)

The NAV is the value of one share of a mutual fund. Computed daily, it is calculated by adding together the value of all the fund's holdings, subtracting expenses and liabilities and dividing by the number of shares outstanding.

No Load Fund

A mutual fund whose shares are sold without a sales charge or commission and without an asset-based distribution fee of more than .25 percent per year.

Non-investment Grade Bond

Considered by rating services like Moody's or Standard & Poor's to carry a higher risk of default, these bonds are typically given low credit ratings (ranging from BB to D). Also called "junk" bonds, these securities attempt to compensate investors for their higher risk by paying higher yields.

O

Open-End Fund

A mutual fund that is formed to continuously issue and buy back shares to meet investor demand. The share price is determined by the market value of the securities held by the fund's portfolio, and it may be higher or lower than the original purchase price. Open-end funds can be load or no-load.

Operating Expenses

In the securities industry, the costs of running a mutual fund, which are paid out of a fund's assets before earnings are distributed to fund shareholders.

Overvalued

A stock whose current market price is estimated to be too high given the firm's earnings, growth potential or other criteria.

P

Parent Company

A company that owns or otherwise controls another company or companies. Golden West Financial Corporation is the parent company of World Savings, Atlas Securities and Atlas Advisers.

Payable Date

The day on which a mutual fund pays distributions to its shareholders.

Payment Cap

The maximum amount an ARM payment can increase at a payment change date regardless of the amount of increase in the interest rate. For example, a current loan payment of $1000, with a 7.5% payment cap, may increase to no more than $1075 on the next payment change date.

Portfolio

A pool of investments that consists of stocks, bonds or other assets, either solely or in combination. A well-diversified portfolio can help reduce investment risk (see Common Stock, Bond).

Portfolio Turnover

A measure of a mutual fund's trading activity that indicates how much buying and selling of securities has taken place.

Prepayment

The payment of principal on a loan before it is due.

Prepayment Fee

A fee assessed to a borrower in connection with a prepayment.

Price-to-Earnings Ratio (P/E Ratio)

A stock's price divided by its reported annual earnings per share.

Principal

In a savings or checking account, the amount deposited, excluding earned interest. In a loan, the sum of money, exclusive of interest charges and other charges and fees, owed to the lender by the borrower.

Promissory Note

A legal document describing the contractual terms under which a borrower agrees to repay a sum of money to a lender.

Prospectus

For mutual funds and variable annuities, a legally required document that details investment objectives, history and performance, and describes an investment's operation, fees and other legal and financial information. Filed with the Securities and Exchange Commission, a prospectus can help investors make more informed investment decisions and should be read before investing.

Q

Qualified Retirement Plan

401(k) plans, 403 (b) plans or Keogh plans are sometimes referred to as qualified retirement programs. Such plans typically allow individuals to contribute both pre- and after-tax money for a tax-deferred investment. These plans are usually funded by contributions from employee wages, which may be enhanced by employer contributions.

R

Real Estate Loan

A loan that uses real property as security or collateral for the loan.

Real Estate Settlement Procedures Act (RESPA)

A Federal law that, among other things, requires lenders to provide home mortgage borrowers with estimated loan closing costs and other disclosures.

Reconveyance

A method of releasing a lien against real property.

Record Date

The date that determines which shareholders are eligible to receive dividends or capital gains declared by a mutual fund.

Redemption

When you sell your mutual fund shares back to the fund, you are considered to be "redeeming" your investment.

Refinancing

The process of paying off an existing loan with the proceeds from a new loan.

Reinvestment

An option that allows you to automatically use your dividend and capital gains distributions to purchase new fund shares.

Revocable Trust

A type of trust that either may be changed or terminated by the grantor during his or her lifetime.

Revolving Debt and Credit

Revolving credit is credit that is repeatedly available up to a specified amount as periodic repayments are made. Revolving debt is the total amount of the credit that has actually been used and is outstanding at any given point in time. "revolving debt payments" refers to the minimum periodic payments that are required to repay the current outstanding balance under a consumer revolving payment plan. Examples of consumer credit plans that provide revolving credit include major bank cards, such as American Express, Visa, MasterCard and Discover, and department store and gas cards.

Risk

The possibility that a given investment will lose value. Types of investment risk include currency risk, inflation risk, capital risk, market risk and interest-rate risk. Risk is a trade-off for investors. In order to increase the potential for reward, one usually has to assume a greater amount of risk.

Rollover

The tax-free transfer of funds from one qualified retirement plan to another within a specified period of time.

S

Satisfaction of Mortgage

A recorded document issued by a lender verifying full repayment of a mortgage loan.

Second Mortgage

A mortgage recorded subsequent to the first mortgage or otherwise made "junior" to another mortgage. A second mortgage is always subordinate to the first mortgage on the same property.

Securities and Exchange Commission (SEC)

The primary federal agency responsible for administration and enforcement of U.S. securities laws. Among other matters, the SEC oversees disclosure requirements for various types of securities.

Share Price

For mutual funds, the share price is the net asset value of an individual share of the fund.

Signature Guarantee

An assurance by a financial institution or other entity that a particular signature is valid. Typical guarantors include commercial banks, trust companies, savings and loan associations, or member firms of a national securities exchange.

Simplified Employee Pension Plan (SEP)

A tax-deferred retirement plan for small businesses.

Single Premium Annuity

An annuity purchased with one lump-sum payment. Unlike flexible premium annuities, single premium annuities don't generally allow you to make additional premium payments at a later time (see Flexible Premium Annuity).

Standard & Poor's 500 Index (S&P 500)

A daily measure of stock market performance that is based on a selected group of 500 companies. The S&P 500 is often used as a general indicator of the equity market.

Statement of Additional Information (SAI)

A supplement to the information contained in a mutual fund's prospectus. It provides more detailed information about fund policies, operations and risks, among other things (see Prospectus).

Subsidiary

A company owned or controlled by another company.

T

Tax Bracket

Typically the marginal tax rate you pay on your last dollar earned.

Tax-Deferred

Earnings accumulate in qualified retirement accounts or annuities without being taxed. Instead, taxes are deferred until money is withdrawn or a distribution is made.

Term

In a mortgage loan, the time period within which a loan must be repaid. Mortgage terms typically range from 15- to 40-years. In a certificate of deposit, the specified period of time during which funds earn interest.

Title

The legal ownership of property.

Total Return

The change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains distributions. Total Return is expressed as a percentage of the initial investment.

Trade Date

The date used to determine the price you paid for your investment.

Transaction Costs

Transaction costs, for purposes of an investment in securities or mutual funds, include fees such as brokerage commissions or mutual fund fees, which are charged when acquiring or selling assets.

Treasury Constant Maturity (TCM)

The Treasury Constant Maturity index is the average of the most recently published 12-month yields on United States Treasury securities. The TCM is based on a constant maturity of one year.

Treasury Securities

Treasury securities, such as bills, notes and bonds, are debt obligations issued and backed by the U.S. Government. Bills are short-term securities with maturities of one year or less. Notes are intermediate-term securities with maturities of one to 10 years. Bonds are long-term securities with maturities in excess of 10 years.

Trust

A legal arrangement whereby control over property or funds is transferred to a trustee (a person or an organization) for the benefit of a designated person (the "beneficiary"). Trusts are created for a variety of reasons, including tax savings and improved asset management.

Trustee

An appointed person or organization that manages the contents of a trust.

Trustor

The creator of a trust, the person who transfers assets to a trust, or a person who encumbers his or her interest in real property by a transfer to a trustee under a deed of trust.

12b-1 Fee

The annual fee charged by a mutual fund to cover distribution expenses, such as marketing, servicing or advertising.

U

Undervalued

A stock whose current market price is estimated to be too low given the firm's earnings, growth potential or other criteria.

Uniform Transfers to Minors Act (UTMA) [formerly Uniform Gifts to Minors Act (UGMA)]

A law in effect in most states that governs the transfer of money or property to minors. Such transfers are irrevocable. Under UTMA, a custodian, who may also be the donor, manages the property while the minor retains full rights to the principal and income.

V

Value Stocks

Stocks that are considered to be inexpensive, based on measures relative to their market value, such as current earnings or total assets. Often, these stocks are considered out of favor or "undervalued" by the market for some reason.

Variable Annuity

A tax-deferred contract issued by an insurance company that offers a choice of investment options, allowing purchasers to choose from a number of subaccounts with various investment objectives. Variable annuities can offer diversification, flexibility and estate benefits, and they are often used as a supplement to 401(k) and IRA plans, because contribution limits are much less restrictive.

Volatility

The degree of fluctuation in the value of a security. The greater the volatility, the wider the fluctuation in a security's price.

W

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X

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Y

Yield (7-Day or 30-Day)

In the case of mutual funds, the annualized current rate of investment income is calculated with a Securities and Exchange Commission formula that includes the fund's net income (based on the yield to maturity of each bond it holds), the average number of outstanding fund shares during the 7-day or 30-day period shown, and the maximum offering price per share on the last day of the period.

Yield Curve

A plot of the yields for bonds of different maturities taken at a specific point in time. Normally, the longer a bond's maturity, the higher its yield will be to compensate investors for greater risk.

Z

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Lighthouse Financial Group

4001 Main St

Vancouver, WA 98663

Office: (360) 737-3150

Toll Free: 1-866-737-3150

Fax: (360) 737-3347