Personal Finance

Lease

a legal document that defines the conditions of a rental agreement

Security Deposit

typically required when you sign a lease and is often one month's rent

Single family dwellings

include previously owned houses, new houses, and custom built homes

Multiunit dwelling

have more than one living unit

Condominiums

are individually owned housing units in a building with several such units

Cooperative housing

is a form of housing in which the units in a building are owned by a non-profit

Factory built houses

are fully or partially assembled in a factory and then moved to the living site

prefabricated home

with components built in a factory, is assembled at the housing site

modular home

has completed pieces transported and set on a concrete foundation

mobile homes (legally called manufactured homes)

are not often moved from their original sites

Zoning laws

restrictions on how the property in an area can be used

home inspection

is an evaluation by a trainer home inspector can minimize future problems

appraisal

which is not a home inspection but an assessment of the property's current market value

purchase agreement or contract

legal offer to purchase the home

earnest money

is a portion of the price of a home that the buyer deposits as evidence of good faith

private mortgage insurance

protects the lender from financial loss due to default

Mortgage

a long term loan on specific piece of property such as a home or other real estate

buy down

is an interest rate subsidy that reduces the mortgage payments during the first few years of the loan

second mortgage/home equity loan

allows a homeowner to borrow on paid up value of the property

reverse mortgages

provides homeowners who are 62 or older with tax-free income in the form of a loan that is paid back (with interest) when the home is sold, or the homeowner dies

Premium

fee paid to insurance company

Insurance

protection against possible financial loss

Risk Shifting

transferring risk to an insurer

Policy Holder

purchaser of policy

Hazard

anything that increases the likelihood of loss through some perial

Insurance Company

risk-sharing firm that assumes financial responsibility for losses

Deductible

set amount the policyholder must pay per loss on an insurance policy

Risk

chance of loss or injury

Peril

anything that may possibly cause a loss

Risk Assumption

taking on responsibility for the negative results of a risk

Policy

a person joins the risk-sharing group by purchasing a contract

Risk Avoidance

avoid risk of traffic accident by not driving to work

Risk Reduction

Wearing a seatbelt and installing fire extinguishers

Coverage

protection provided by the terms of the insurance policy

Insured

people protected by the policy

credit life insurance

used to pay off certain debts

vanable life policy

your premium payments are fixed; cash value varies with stock market

limited payment policies

charge premiums for only a certain length of time until policy is paid up

endowment life insurance

coverage for a specific period and pays an agreed-upon sum of money to the policyholder if they are still living at the end of the endowment period

group life insurance

covers many people under a single policy

adjustable life policy

change your coverage as your needs change

universal life insurance

term policy with a cash value

return of premium term

returns all the premiums if you survive to the end of the policy term

term insurance

provides protection for a specified period of time

decreasing term

pays less to the beneficiary as time passes

whole life insurance

permanent policy for which you pay a specified premium each year for the rest of your life; may also serve as an investment

renewable term

at conclusion of the term, to renew for another term

multiyear level term

guarantees you will pay the same premium for the duration of your policy

conversion term

allows you to change from term to permanent coverage

General Obligation Bond

a bond backed by the full faith, credit, and unlimited taxing power of the government

Revenue Bond

bond that is repaid from the income generated by the project it is designed to finance

Treasury Bonds

bonds issued with a 30 year maturity

Treasury Notes

bonds issued with maturities of 2 to 10 year maturities

Debenture Bond

bond that is backed only by the reputation of the issuing corporation

Serial Bonds

bonds of a single issues that mature on different dates

Call Feature

allows corporation to call in or buy outstanding bonds from current bondholders before the maturity date

TIPS

treasury inflation-protected securities

High

corporate bond that pays higher interest, but also has a higher risk of default

Bond Indenture

the actual legal conditions for a corporate bond

Corporate Bond

corporation's written pledge that it will repay a specified amount of money

Face Value

dollar amount the bondholder will receive at the bonds maturity

Maturity Date

the date on which the corporation is to repay the borrowed money

Treasury Bills

bonds issued with maturities as long as one year

Municiple Bonds

a debt security issued by a state or local government

Convertible Bonds

bond that can be exchanged for a specified number of shares of the corporation's common stock

Trustee

bondholder's representative

Mortage Bonds

a corporate bond that is secured by various assets of the issuing firm

Sinking Fund

a fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue

large-cap

funds invest in companies with total capitalization of $10 million or more

mid-cap

funds invest in companies with total capitalization of $2 billion to $10 billion

regional

funds seek to invest in stock traded within one specific region of the world

sector

funds invest in companies within the same industry

small cap

funds invest in smaller, lesser-known companies with a total capitalization of between $300 million and $2 billion

socially responsible

funds avoid investing in companies that may cause harm to people, animals, and the environment

high yield bond

funds invest in high-yield, high risk corporate bonds

intermediate corporate bond

funds invest in investment grade corporate debt with maturities between 3 and 10 years

intermediate us government bond

funds invest in U.S treasury securities with maturities between 3 and 10 years

long term corporate bond

fund invest in investment-grade corporate bond issues with maturities in excess of 10 years

long term (US) government bond

funds invest in U.S Treasury securities with maturities in excess of 10 years

municipal bond

funds invest in municipal bonds that provide investors with tax-free interest income

short-term corporate bond

funds invest in investment-grade corporate bond issues with maturities of less than three years

short-term (US) government bond

funds invest in US Treasury securities with maturities of less than three years