Personal Finance Terms
Terms You Need to Know
Whether getting into the financial arena for the first time or after contributing for a while it is nice to refresh yourself on the meaning of several terms as throughout the markets constant evolution the meanings have the ability to change and adapt to the rules and regulations that may be altered. SO to further assist you in finding the proper definitions for financial terms, we here at Jumbo Loans have compiled a quick glossary of the terms we think are the most important to know.
An annuity is a fixed payment for a specific period of time. These commonly refer to payments which are made by life insurance companies on policies or settlements, but may also refer to other payment plans such as lottery winners.
Annual Percentage Rate is the rate of interest charged on loans or credit and is highly variable from lender to lender. You may have heard lenders offering zero percent APR for a limited time, in order to entice buyers.
Your credit score is determined by payment history, credit use, types of credit, and your length of credit history. The higher your score the more likely it is for you to be able to get a car loan or mortgage.
Debt to Income ratio is another important factor for qualifying for a loan, it represents how much of the funds you receive are allocated by debt currently and allows lenders to see if you would be able to make payments.
Hard Money is used to describe going outside of the normal professional institutions and searching for a more private, and possibly riskier alternative to procuring money.
An Individual Retirement Account is a retirement plan specifically not sponsored by an employer, usually they are also a tax deductible investment.
Liabilities are any open debts that have yet to be settled yet, these can include student loans, house payments, and credit cards. These liabilities are factored into your DTI and your net worth respectively.
Your net worth is your individual value if all debts are paid and all assets sold. It is normally calculated by subtracting all debts from the total value of all assets.