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Terms You Should Know

Life is littered with buzzwords, lingo, and jargon. Let us help you make sense of what you see and hear. A glossary of the words you’ll find at Growella.

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529 Savings Plan

A tax-advanged savings plan for higher education, including college, trade school, and graduate school.

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A

Actual Cash Value

A method used by insurance companies to value your possessions. Roughly equal to what an item is worth in its current condition. Accounts for wear-and-tear, and time since purchase.

Adjustable-Rate Mortgage

A mortgage for which the interest rate can change, but only after an initial period of up to 10 years.

All-Inclusive Coverage

A type of insurance coverage within a condo building. Covers common areas and everything inside individual units, except for personal property such as jewelry or collections.

Android Pay

A faster way to pay for something in a store. Hold an Android device over a sensor, and payment is made by credit card automatically.

Annual Fee

The yearly cost for using a product, usually a credit card

Apple Pay

A faster way to pay for something in a store. Hold an Apple device over a sensor, and payment is made by credit card automatically.

Appliance

A piece of equipment that does a specific job, usually in a house. Examples: dishwasher, refrigerator, dryer.

APR

Annual Percentage Rate. A government calculation meant to show the true cost of borrowing money over long periods of time.

Assumable Mortgage

A mortgage which can be passed along, interest rate and terms intact, to the next owner of a home.

Automobile Insurance

A contract covering the costs of car repair, and other costs from an automobile accident. Mandatory for all U.S. drivers.

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B

Balance

The amount of money in an account (e.g. bank account, retirement account); or, the amount of money due on a credit account (e.g.; student loan, credit card).

Bankruptcy

A legal process available to consumers and businesses by which debts are eliminated or reduced.

Bare Walls Coverage

A type of insurance coverage within a condo building. Covers common areas only. Does not extend into individual condo units.

Barter

An exchange of goods or services without using money

basis point

Equal to 1/100 of one percent, or 0.01%. Often abbreviated as “bps”.

Bodily Injury Liability

A component of auto insurance coverage. Provides protection for an at-fault driver after a car accident from medical expenses, legal fees, loss of income, and the cost of a proper funeral, if required.

Bumper-to-Bumper Warranty Coverage

A promise from a car manufacturer to pay for all required repairs between a car’s back bumper and front bumper. Protects car owners from defects in workmanship or material.

Bundling

When an insurance company gives discounts to customers who have two or more policies. Also known as a “multi-line policy”.

Business School

Graduate school that focuses on topics of business. Master of Business Administration (MBA) is its most common degree.

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C

Car Lease

A form of car ownership. Most commonly, a driver pays for the depreciation of the car, and returns the automobile to the original dealership after a pre-determined number of years.

Cash Back

An incentive program that awards a cash refund to buyers after items are purchased.

Cash Gift for Down Payment

A cash gift used by home buyers for down payment on a home, which requires no repayment whatsoever.

Certification

A diploma for completing specific coursework and training, most often used by trade/vocational schools.

Cleared-to-Close

The status assigned to a mortgage application after a lender issues its final loan approval, and there is nothing left to do.

Closing

When money and keys are exchanged between a home buyer and home seller. The last step of buying a home.

Closing Cost

A fee linked to the buying or selling of a home, that wouldn’t be payable if the home didn’t change ownership.

Collision Coverage

A component of auto insurance coverage. Provides protection from the damage to a car from of a car accident, regardless of which driver is at-fault.

Commission

A sum of money paid for completing a task, usually linked to sales. Examples: Selling a home, attracting new customers.

Comprehensive Coverage

A component of auto insurance coverage. Provides protection from theft; and, random events which may damage your car including fires, weather, and falling trees and structures.

Condominium

A legal form of homeownership in which real estate is divided into units, which individuals can purchase and own.

Condominium Master Insurance Policy

An insurance policy for the shared areas of a condo community. Covers damage, theft, and injury.

Conventional 97 Mortgage

The brand name for a mortgage allowing home buyers to make a downpayment of 3% on a home.

Conventional Mortgage

A mortgage which conforms to the guidelines of Fannie Mae or Freddie Mac.

Coverdell Education Saving Account

A tax-advantaged savings plan for education which can be used for primary, secondary schools in addition to college, trade school, and graduate school.

Covered Peril

Items and events that are included and reimbursed as part of an insurance policy.

Credit Bureaus

Companies that use a person’s personal information to determine their credit score. Experian, Equifax, and TransUnion are the three largest.

Credit Card

A cash alternative used to buy things today, to be repaid at a later date.

Credit Limit

The maximum “tab” you can run on your credit card at any one time.

Credit Score

A number intended to reveal the likelihood of a person repaying money they’ve borrowed. High scores are better than low scores.

Currency

Something of known value, such as paper money and coins, which can be traded for goods and for services

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D

Debit Card

A cash alternative that moves money from a bank account immediately to pay for a purchase.

Deductible

The amount of money a person must pay from their own savings after an accident or loss before an insurer will pay for the rest of the costs.

Deferred Payments

Payments on a loan not due until some point in the future, either months or years.

Depreciation

The reduction in something’s value over time, usually from regular use

Direct Debit

A method for making payments to a company. The company stores your bank account information, and withdraws the cash when money is due.

Direct Deposit

When money is sent to your bank account by an employer directly, or other person who is making payment to you.

Direct Loan

A student loan made by the U.S. Department of Education.

Direct PLUS Loan

Loans for parents of undergraduate students and for graduate school students. Used for expenses not covered by other financial aid.

Discount Points

An optional, upfront, one-time fee paid by mortgage borrowers, giving access to lower mortgage rates.

Dividend

Money that companies pay to their shareholders regularly from profits or cash reserves. Typically paid quarterly or annually.

Dividend

Money that a company sends to its stockholders at regular intervals, usually at the start of a quarter.

Doctorate

The highest level of academic degree available to students. Examples: Medical Doctorate (M.D), Ph.D.

Down Payment

The amount of cash that a home buyer pays toward the purchase of a home.

Down Payment Assistance

Programs that give cash grants and loans to a home buyer.

Down Payment Grant

A cash gift made to a home buyer that the home buyer never has to pay back.

Due on Sale

The legal requirement that a mortgage loan gets paid off when a home is sold, often using the cash from the sale.

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E

Emergency Fund

Money set aside for when life takes an unexpected turn, such as job loss or when health care costs not covered by insurance.

EPO

A low-cost health insurance plan that will not make payments if you need to see a doctor outside of its network of physicians.

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F

Federal Housing Administration

Government agency whose purpose is to promote affordable homeowner for U.S. citizens. Created in 1934.

FHA Mortgage

A mortgage insured by the Federal Housing Administration (FHA). FHA mortgages are known for allowing low-down payments, and having flexible credit guidelines.

FICO

Abbreviation for Fair Isaac Corporation, which calculates consumer credit scores. Often used generically as a substitute for “credit score”.

Fixed Interest Rate Loan

A loan for which the interest rate cannot change.

Fixed-Rate Mortgage

A mortgage loan for which the interest rate cannot change.

Flip Homes

To buy a home, make repairs, then attempt to sell the home at a profit.

Foreign Transaction Fee

A charge applied to credit card purchases made internationally, usually equal to 3% of the purchase price. Sometimes called a Currency Conversion Fee.

Freelance

To be self-employed, performing a specific service, for one or many people at a time. Examples: Graphic design, dog walking, nanny.

Full Glass Coverage

Optional coverage for auto insurance. Pays for a replacement windshield that’s been damaged by weather, rocks, or other debris.

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G

Gap Insurance

Optional coverage for auto insurance. Pays as cash the difference between what your car is worth, and what you currently owe on your loan or lease.

Graduate School

A school for students to earn advanced academic degrees, including Master’s Degrees and Doctoral Degrees.

Graduation Equivalent Diploma

Substitute for a high school degree which demonstrates that students have met the requirements of a high school-level education.

Grant

A cash gift, usually from an organization to an individual, which the individual never needs to repay.

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H

Health Insurance

Insurance which pays for a person’s medical and surgical expenses.

Health Savings Accounts

A highly tax-advantaged savings account which is used to pay for a person’s health and medical expenses.

HMO

Abbreviation for Health Maintenance Organization. A health insurance plan that prefers you to see doctors within its physician network, where costs can be lower.

HO-6 Condo Insurance

Homeowners insurance for condominium owners. Covers damage, theft, and liability within a condominium unit. Does not cover flooding.

Home Appraisal

The formal valuation process for a residential home, as performed by a state-licensed person.

Home Inspection

A complete examination of a home and its appliances, performed by a licensed professional.

Home Inspection Clause

An agreement between a home buyer and a home seller that gives rights to the buyer to negotiate for repairs, or to back out of the transaction, if a home inspection finds damage.

Home Security System

Protection for a home against break-ins, robbery, water damage, fire, frozen pipes, carbon monoxide poisoning, and more.

Homeowners Association

A management organization of homeowners within a planned community, such as a condominium or a subdivision. Sometimes abbreviated as HOA.

Homeowners Insurance

Insurance which pays for damage to a home from accident or robbery. Also known as hazard insurance.

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I

Industry Conference

A large-scale meeting for people with similar interests, usually multi-day, featuring a mix of education and networking opportunities.

Insurance

An agreement which provides a person with protection against the costs of accident, injury, and damage.

Insurance Claim

A person’s formal request for cash payouts to an insurance company after damage has occurred.

Interest

A fee for borrowing money.

Interest Rate

The rate at which interest is charged when a person borrows money.

Internship

A work-program for students and graduates, offering real-world job experience for periods of up to a year. May be paid or unpaid.

IRS

Abbreviation for Internal Revenue Service. The division of the U.S. government responsible for the collection of federal income tax.

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J

Job Placement Services

Organizations that help members of a group, including military veterans and college graduates, find jobs.

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K

Kiddie Condo

The familiar name for a Federal Housing Administration (FHA) mortgage loan option which allows a child to buy a home with a parent’s co-signature. Often used for college housing.

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L

List Price

The price at which a home is listed for sale. Homes can sell for more than their list price, or less.

Living Will

A written document that details how a person wants their medical care handled if they’ve lost the ability to communicate for themselves.

Low- and No-Down Payment

Mortgage loans for which a down payment of five percent or less is required.

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M

Make An Offer

When you tell a home seller that you’d like to buy their home, officially. Usually includes the price at which you’re willing to buy the home, and the date on which you’re willing to exchange keys.

Master's Degree

A first-level academic degree for students who have completed graduate school.

Medical Payments Coverage

A component of auto insurance coverage. Provides protection for ambulance rides, airlifts, and emergency medical care for a driver and its passengers.

Mortgage

A loan used to purchase a home, including stand-alone homes, homes with up to 4 units, and condominiums and co-ops.

Mortgage Calculator

A special calculator meant to simplify the math tied to owning a home.

Mortgage Guidelines

A list of qualifications a person must satisfy in order to get mortgage-approved.

Mortgage Lender

An interchangeable term used for person who helps you get your mortgage loan approved, and the company that the person works for.

Mortgage Rate

The interest rate charged for a mortgage loan. Mortgage loans with lower interest rates cost less over time.

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N

National Association of REALTORS

The national trade association for real estate agents. Members are known as REALTORS®. Often abbreviated as NAR.

No Annual Fee

Typically associated with credit cards. Denotes that consumers are not charged a fee for access to a product.

Non-Resident Permanent Alien

A non-U.S. citizen who is permitted to live in the United States on, at least, a temporary basis.

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O

Offer Letter

A written job offer from an employer to a job candidate with salary and a start date.

Opportunity Cost

The cost of not doing something. Example: You earn $20 as a movie extra, but skip work to do it and work pays $100 per day. Your opportunity cost is $80.

Overdraft

An attempt to withdraw or spend more money than what’s in a bank account.

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P

Part-Time Job

A job requiring less than 30 hours per week, and which is usually marked by shifts and rotations.

Perkins Loan

A fixed-rate student loan for undergraduate and graduate students with financial need, offered by the U.S. Department of Education.

Personal Articles

Insurance for the items in your home including furniture, jewelry, and collections.

Personal Liability Insurance

Insurance for the costs of injuries that guests sustain in your home, and damage guests may cause. Part of a homeowners insurance or renters insurance policy.

Personal Network

The people you know personally and professionally, who can help you with your career.

Personal Property

Items that belong to you. Personal property is anything that can be moved into a home; and, moved out of a home.

Personal Umbrella Insurance

Additional liability insurance. Designed to protect a person from major damage claims and lawsuits.

PPO

Abbreviation for Preferred Provider Organization. A health insurance plan that gives you freedom of choice with your doctors, with access to physicians offering lower, pre-negotiated costs for services.

Pre-Approval

A document issued by a mortgage lender stating that a person is expected to be mortgage-approved, assuming no detrimental changes with their job, salary, or credit.

Private Mortgage Insurance

An insurance policy for mortgage lenders that protects against loss on certain low- and no-downpayment mortgages.

Private Student Loan

A student loan that’s not made by the U.S. Department of Education.

Property Damage Liability

A component of auto insurance coverage. Provides protection against hit-and-run accidents, and other drivers carrying insufficient insurance.

Put Down

A jargon-like expression. Refers to the size of a person’s down payment on a home. Can be expressed in dollar terms, or percentage of a home’s purchase price.

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Q

Quarter

3-month sections of the year, often abbreviated by “Q” followed by a number. January begins Q1; April begins Q2; July begins Q3; October begins Q4.

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R

Real Estate Agent

A licensed professional who represents home buyers and home sellers with the purchase and sale of homes.

Real estate contracts

A written agreement between a home buyer and a home seller, including price and dates, which details how homeownership will be transferred.

Real Estate Taxes

A tax bill linked to homeownership, due at least once per year, which may be collected by the city, the township, the local government, or each.

Refinance

To replace your existing mortgage loan with a new mortgage loan, usually to save money.

Rental Reimbursement Coverage

Optional coverage for auto insurance. Covers the cost of a rental car while your automobile is being repaired.

Renters Insurance

Insurance which pays for damage to a home from accident or robbery. Available to renters only.

Replacement Coverage

A method used by insurance companies to value your possessions. Equal to the cost of buying a similar product with similar features, at full retail price.

Resume

A stylized list of a person’s job qualifications and experience.

Retirement

The point in a person’s life when they stop working completely.

Revolving Credit

Credit that is immediately available as debts are paid down

Roadside Assistance Coverage

Optional coverage for auto insurance. Provides tow services after a breakdown, locksmiths for when you’re locked out, and roadside help replacing a flat tire.

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S

Salary

A regular payment for time and service made from an employer to an employee, typically every other week.

Samsung Pay

A faster way to pay for something in a store. Hold a Samsung device over a sensor, and payment is made by credit card automatically.

Scholarship

A cash award made to a student for tuition and other costs of education.

Secured Credit Card

A credit card requiring a security deposit from the card holder, often used to establish a credit rating.

Selective Service

A database of persons which makes one eligible to be drafted into the U.S. military, if needed

Shop Around

To compare competing offers between lenders, companies, or banks, in search of the best product for your needs.

Side Hustle

Jargon for a “second job”, usually freelance work.

Single Entity Coverage

A type of insurance coverage within a condo building. Covers common areas, and original fixtures and plumbing within individual condo units.

Stafford Loan

A student loan that is offered by the U.S. Department of Education to undergraduate and graduate school students.

Statement

A formal communication showing how much money is owed to a company, bank, or lender.

Student Loan

A loan made to students, parents, or family members used to pay for education.

Subsidized Student Loan

A student loan for which the U.S. governments pays all interest due on the loan while the student is studying, and for a small period afterward.

Surviving Spouse

A person who was married to a deceased member of the military at the time of his or her death.

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T

Tax Deduction

Expenses which can be used to lower the amount of your income taxed by the government

Teaser Rate

The starting interest rate for a credit card, mortgage, or other loan that can change in the future, on a specific date.

Term Life Insurance

A life insurance policy that makes payment to people upon the death of the policyholder.

Trade School

An educational institution that teaches skills related to a specific job. Also known as vocational school and technical school.

trust

An agreement that gives a third party control over a person or household’s money and assets.

Tuition

The cost of education.

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U

Uninsured and Underinsured Motorist Coverage

A component of auto insurance coverage. Provides protection against hit-and-run accidents, and other drivers carrying insufficient insurance.

Unsubsidized Student Loan

A student loan for which the student is responsible for paying all interest that is due.

USDA Mortgage

A mortgage guaranteed by the U.S. Department of Agriculture (USDA). USDA loans are available in rural and less-dense suburban areas.

Utilities

Public services used by homeowners and businesses, such as telephone, water, gas, and electric.

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V

VA Mortgage

A mortgage guaranteed by the Department of Veterans Affairs (VA). VA loans are available with 100% financing to members of the U.S. military.

Variable Interest Rate Loan

A loan for which the interest rate can change over time.

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W

Wage Garnishment

When a judge requires that a portion of your paycheck be withheld each pay period, and paid to a person to whom you owe money. Continues until the debt in question has been paid-in-full.

Will

A document which states how your possessions and property should be distributed upon your death. Also known as a Last Will and Testament.

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Y

Yield

The return rate on an investment. Usually expressed as a percentage of the investment’s current value.

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Z

Zero Interest Rate Policy

When a nation’s central bank lowers its borrowing rate to zero-percent. Usually accompanied other policies designed to stimulate an economy.

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