"AVAILABLE WITH" BANK"
The bank authorized in the Letter of Credit to effect payment under, accept or negotiate the Letter of Credit.
The bank named in a term Letter of Credit on which drafts are drawn that has agreed to accept the draft. By accepting the draft, the Drawee Bank signifies its commitment to pay the face amount at maturity to anyone who presents it at maturity. After accepting the draft, the Drawee Bank becomes the Accepting Bank.
Money depodocumentd with a financial institution for investment and/or safekeeping purposes.
ACH (AUTOMATIC CLEARING HOUSE)
Electronic drafting system that debits an authorized bank account and electronically transfers the funds scheduled for remittance.
The balance that remains when all payments made during a billing cycle are subtracted from the balance from the previous billing cycle.This balance does not include finance charges for the current billing cycle.
The bank to which the Issuing Bank sends the Letter of Credit, with instructions to notify the Exporter (Beneficiary).
A credit card offered by a lending institution in partnership with another institution. These cards are also known as co-brand cards, because both institutions lend their branding to the card.
A loan repayment plan, which enables the borrower to reduce his debt gradually through monthly payments of principal and interest. Payment of debt in regular, periodic installments of principal and interest, opposed to interest-only payments.
An amortization schedule shows the amount of each payment applied to interest and principals and shows the remaining balance after each payment is made.
An annual fee for a line of credit may be required. If an annual fee is assessed you will be billed for that amount, annually for the term of the loan.
The party applying for one or more bank service. The party that has contracted to buy goods; the Importer in the Letter of Credit process.
This is the fee charged by the lender to cover a portion of the costs of processing a loan application.
An opinion of real estate value based upon a factual analysis. Legally, an estimation of value by a disinterested person of suitable qualifications.
APR (ANNUAL PERCENTAGE RATE)
To make it easier for consumers to compare mortgage loan interest rates, the federal government developed a standard format called an "Annual Percentage Rate" or APR to provide an effective interest rate for comparison shopping purposes. Some of the costs that you pay at closing are factored into the APR for ease of comparison. Your actual monthly payments are based on the periodic interest rate, not the APR.
APY (ANNUAL PERCENTAGE YIELD)
The amount of interest earned on an account after one year.
ARM (ADJUSTABLE RATE MORTGAGE)
An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure, which spells out the terms of the loan.
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds and so on).
Acronym for automated teller machine.
A person who has been given permission to make changes to a credit account. This status must be given by the primary account user. An authorized user is not legally responsible for repaying the account.
AVERAGE DAILY BALANCE
The balance that results from adding together all the daily balances of a credit account in the billing cycle and dividing by the number of days in the billing cycle. This balance is often used to calculate finance charges.
An outstanding amount of money. In banking, balance refers to the amount of money in a particular account. In credit, balance refers to the amount owed.
Repayment of one credit debt with another credit source.
BALANCE TRANSFER FEE
The fee charged to transfer balances between two credit sources. This feeis often a percentage of the amount transferred.
A short-term fixed-rate loan which involves smaller payments for a certain period of time and one large payment for the entire balance due at the end of the loan term.
The final payment that is made at the maturity date of a balloon mortgage and pays the loan in full.
An establishment for lending, issuing, borrowing, exchanging, and safeguarding money.
A court proceeding in which a debtor, who owes more than his assets, can relieve the debts by transferring his assets to a trustee.
The party that has contracted to sell the goods; the Exporter in the Letter of Credit process.
BILL OF EXCHANGE
An unconditional order in writing addressed by one person to another, signed by the person giving it , and requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum of money to or to the order of a specified person or bearer. Also referred to as draft.
The period of time that a credit statement covers.
The summary of all actions applied to a credit account during a billing cycle. These can include payments, purchases, finances charges, fees and other transactions.
BI-WEEKLY MORTGAGE PAYMENT
A mortgage that requires payment to reduce the debt every two weeks instead of monthly. The 26 (sometimes 27) biweekly payments are each equal to one-half of the monthly payment that would be required with a standard 30 year fixed-rate mortgage. The result is a faster loan balance reduction with substantial savings in interest.
An interest-bearing certificate that serves as evidence of a debt with a maturity date. Typically, bonds represent obligations of a government or business corporation. A real estate bond is a written obligation, usually secured by a mortgage or deed of trust.
A person who received funds in the form of a loan with an obligation to repay principal with interest.
A check that a bank has refused to cash or pay because you have no funds to cover it in your account.
A loan spanning the gap between the termination of one loan (generally short-term) and the start of another (generally permanent long-term) loan. Also referred to as gap financing.
Sometimes called a "swing loan", a bridge loan is generally a loan that is secured by a borrower's current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
A "used" check that has been paid and subtracted from the check-writer's account. Canceled checks have extra data on them from the bank. They are usually mailed to the writer each month with the statement, although many banks keep records that are available upon request. Canceled checks are excellent receipts that should be kept for reference and tax purposes.
Refers to a provision of an adjustable rate mortgage (ARM) that limits how much the interest rate or payment can increase or decrease.
- The net worth of a business defined by the amount by which its assets exceed its liabilities.
- Money used to create income.
- The money or other assets comprising the wealth at the disposal of a person or business enterprise.
- The accumulated wealth of a business or individual.
The written statement that defines and explains all legal terms for a credit card agreement. It includes payment terms, billing dispute procedures and communications guidelines, among other items.
Currency, checks and other negotiable instruments acceptable for direct deposit by a bank..
CASH ADVANCE FEE
A fee assessed when a card holder uses a credit card to obtain cash. These fees are often charged as a percentage of the cash obtained.
A requirement by some lenders that buyers have sufficient cash remaining after the closing to make the first mortgage payment.
CASH TO CLOSE
Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.
A check issued by a bank, drawn on its own funds rather than on one of its depositor's funds.
CERTIFICATE OF DEPOSIT (CD)
An instrument, issued by a bank or other financial institution, that is evidence of a type of savings deposit. The document includes the institution’s promise to return the deposit, plus earnings at a specified interest rate within a specified period.
Cost and Freight. Exporter pays costs and freight to deliver the goods to the named port of destination. This term can be used only for sea and inland waterway transport.
Any written document instructing a bank to pay money from the writer's account.
The customer’s checks are kept on record at the bank and the canceled checks are not returned to the customer.
An account for which the holder can write checks. Checking accounts pay less interest than savings accounts, or none at all.
Cost, Insurance and Freight. Exporter pays costs, insurance and freight to deliver the goods to the named port of destination.
A check "clears" when its amount is debited (subtracted) from the payer's account and credited (added) to the payee's account.
A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, a closing usually involves the seller, the buyer and the lender. Usually the last step in buying a home.
Documents are signed, the balance of the loan costs is calculated, funds are disbursed and the transaction is completed. In the case of a refinance, the closing involves the borrower and the lender. Sometimes referred to as the settlement or the close of escrow.
The total of all the items that must be paid at closing related to your new mortgage. Closing costs are made up of individual closing cost items such as origination fees, escrow fees, underwriting fees and processing fees.
This is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
A person who signs a promissory note along with the primary borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. Sometimes called a co-signer.
Anything that a bank accepts as security against the debtor's not repaying a loan. If the debtor fails to repay the loan, the bank is allowed to keep the collateral. Collateral is most commonly in the form of real estate (e.g., a home).
Documents exchanged between the buyer and the seller such as commercial invoices or transport documents that give detail about the goods and/or services contracted.
A demand deposit collected balance, kept on deposit by a customer, designed to offset the expenses of the bank for activity or lines of credit.
Interest paid on the original principal balance, and on the accumulated and unpaid interest.
CONFIRMED LETTER OF CREDIT
Letter of Credit where a Confirming Bank, usually located in the Exporter's country, has guaranteed payment under the Letter of Credit assuming that all terms and conditions of the Letter of Credit have been met. With a Confirmed Letter of Credit, payment risk is assumed by the Confirmed Bank as well as the Issuing Bank, thereby providing more protection for the Exporter.
The bank which ,at the request of the Issuing Bank, adds its confirmation to the Letter of Credit. In doing so, the Confirming Bank undertakes to make payment to the Exporter upon presentation of documents under the Letter of Credit assuming all terms and conditions of the Letter of Credit have been met.
CONSTRUCTION PERMANENT FINANCING
A mortgage that finances the construction of a home and converts to permanent, amortizing financing when the home is completed. It allows buyers to deal with only one lender, file only one credit application and pay only one set of closing costs. CO-SIGNER Another person who signs your loan and assumes equal responsibility for it.
In business, buying or borrowing on the promise to repay at a later date. In any credit arrangement there is a creditor (a person, bank, store, or company to whom money is owed) and a debtor (the person who owes money). In bookkeeping, credit is a sum of money due to an individual or institution.
An agency that checks credit information and keeps a complete file on people who apply for and use credit.
A plastic card that gives access to a line of credit. Users are limited in how much they can charge, but they are not required to repay the full amount each month. Instead the balance (or "revolve") accrues interest with only a minimum payment due.
A coverage that pays credit card debt in the event of death, disability or loss of employment.
The maximum amount of money a borrower can access in a credit account.
A financial institution's evaluation of whether a person is suitable to receive credit. Credit ratings are based on an individual's character, capacity to repay, and capital.
A record of an individual's current and past debt repayment patterns. A credit history helps a lender to determine whether a borrower has a history of repaying debts in a timely manner. For our comparison purposes, the credit report fee is considered to be a third party fee.
Money -- anything used as a common medium of exchange. In practice, currency means cash, particularly paper money. Bankers often use the phrase "coin and currency" to refer to cents and dollars.
A bookkeeping term for a sum of money owed by an individual or institution; a charge deducted from an account.
A plastic card which looks similar to a credit card, that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers.
The written instrument that conveys a property from the seller to the buyer. The deed is recorded at the local courthouse so that the transfer of ownership is part of the public record.
A status assigned to a cardholder if he or she fails to perform or conform to all the items listed in the cardholder agreement.
A checking account.
An itemized slip showing the exact amount of paper money, coin, and checks being depodocumentd to a particular account.
An individual or company that puts money in a bank account.
- In accounting, the process of periodically reducing a fixed asset’s book value by charging a portion of the asset’s cost as an expense to the period in which it provides a service.
- To decrease in service capacity or usefulness.
Amount paid to the lender when the loan is originated to account for the difference between the current market-determined cost of interest and the actual lower interest rate of the loan. Points may be paid by either the buyer or seller. Each point is equal to one percent of the original loan amount.
Any inconsistency found in documents presented or failure to comply with the terms and conditions of the Letter of Credit.
Synonymous with Letter of Credit. See Letter of Credit.
An unconditional order in writing addressed by one person to another, signed by the person giving it , requiring the person to whom it is addressed to pay, on demand or at a fixed or determinable future time a certain sum of money to or to the order of a specified person or bearer. Also referred to as a Bill of Exchange.
The bank named in the Letter of Credit on which the drafts are to be drawn.
A deposit of money accompanying an offer to buy property to show goodfaith, generally credited to the buyer at closing.
To sign, as the payee, the back of a check before cashing, depositing, or giving it to someone else. The first endorsement must be made by the payee to authorize the transaction. Later endorsements may be made by whoever receives the check.
The party that has contracted to sell goods. Also known as seller or beneficiary.
Free Alongside Ship. Exporter delivers the goods alongside the vessel on the quay or in the lighters at the named port of shipment.
Documents used in international transactions that are directly related to payment. E.g. drafts.
A basis for making interest rate changes on an Adjustable Rate Mortgage. One example of a financial index could be the change in cost of U.S. Treasury Bonds.
Thos items of a permanent nature required for the normal conduct of a business and not converted into cash during a normal fiscal period. Fixed assets include furniture, buildings, and machinery.
FIXED INTEREST RATE
The interest rate does not change for the full term of the deposit or loan product.
Free On Board. Exporter delivers the goods on board the vessel or at the airport at the named port/airport of shipment.
FOREIGN CURRENCY SURCHARGE
A fee charged when a card purchase utilizes a foreign currency and it must be converted into the cardholder’s home currency.
The length of time between the use of credit to make a purchase and the start of interest on the amount charged.
A person who is financially responsible for the repayment of a credit account but has no use privileges.
A pledge to make good a note or security in case of default by the borrower. Although the original debtor is responsible for the debt, a guarantor becomes liable in the event of a default.
HOME EQUITY LOANS/LINES OF CREDIT
Loans that uses the borrower’s equity in their home as collateral for the loan
The party that has contracted to buy goods. Also known as buyer or applicant.
Standardized contract terms issued by the International Chamber of Commerce that describe the obligations of the Exporter and Importer with respect to freight costs, insurance, taxes, duties, etc. Also called trade terms. Click here for definitions of the most commonly used incoterms.
A published interest rate used to establish the interest rate offered on an Adjustable Rate Mortgage (ARM). Some of the most common indices are treasury bills, treasury securities, London Inter-Bank Offering Rates (LIBOR) and the Cost of Funds Index (COFI).
INITIAL INTEREST RATE
The interest rate charged for the initial period of an Adjustable Rate Mortgage (before the first interest rate adjustment).
The cost of the use of money.
INTEREST RATE CAP
Limits the amount an Adjustable Rate Mortgage may increase or decrease during specific intervals and over the term of the loan. This safeguard protects the buyer from dramatic changes in monthly payments.
A temporarily low interest rate, used as incentive to entice a consumer to sign up for credit. After the introductory period, the rate will increase to the standard percentage.
IRREVOCABLE LETTER OF CREDIT
A Letter of Credit that cannot be canceled or changed without the consent of all parties, including the Exporter. Unless otherwise stipulated, all Letters of Credit are irrevocable.
The bank issuing the Letter of Credit at the request of its customer the Importer (Applicant) in favour of the Exporter (Beneficiary), guaranteeing payment under the Letter of Credit if all terms and conditions are met.
A credit account held by two or more people so that all can use the account and all assume legal responsibility to repay.
A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.
LETTER OF CREDIT
A written instrument issued by a bank at the request of its customer, the Importer (Applicant), whereby the bank promises to pay the Exporter (Beneficiary) for goods or services provided that the Exporter presents all documents called for, exactly as stipulated in the Letter of Credit, and meets all other terms and conditions set out in the Letter of Credit. Also referred to as a Documentary Credit.
Money owed to individuals, businesses, or institutions.
The loan amount as a percentage of the purchase price or, in the case of a refinance, appraised value. For example, a 95% LTV is the same as putting 5% down, or having 5% equity.
An economic system permitting an open exchange of goods and services between producers and consumers, such as is found in the United States.
The date on which the principal balance of a financial instrument becomes due and payable.
The smallest payment a consumer can make in a billing cycle to keep the account from going into default.
Anything generally recognized as a medium of exchange.
The legal document used by a borrower to pledge their property as security in order to obtain a loan. In some areas of the country, the mortgage is called a "deed of trust".
MORTGAGE PRE-APPROVAL SERVICE
A service offered by many lenders that allows you to qualify for financing before finding a house to buy.
A fee charged by the lender for making a real estate loan—usually a percentage of the amount loaned, such as one percent. Not to be confused with an application fee.
A check written for more money than is currently in the account. If the bank refuses to cash the check, it is said to have "bounced."
An individual or company to whom a check is written; one who receives money as payment.
An individual or company who writes a check; one who gives money as payment.
A higher interest rate imposed on an account when it has lapsed into default.
PERSONAL IDENTIFICATION NUMBER (PIN)
A code that provides security for consumers at an ATM.
The total amount of your monthly home loan payment including principal, interest, taxes and insurance(s).
POINT OF SALE(POS)
The store or other location where a transaction takes place.
Fees that are collected by the lender in exchange for a lower interest rate. Commonly called discount points, each point is equal to 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate.
The date when a transaction is recognized on your account.
Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.
The balance that has carried over from the previous billing period.
The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.
The actual balance, excluding interest, of a mortgage loan. Also refers to the amount of the monthly mortgage payment that will be applied to the actual balance.
PROPRIETARY CREDIT CARD
A private labeled credit card typically issued by a department store or petroleum company that can only be used at those specific outlets.
The process of paying off any existing mortgages on a home with a new mortgage loan. Replacing an existing loan with a new one to get a lower rate, switch from one loan type to another or convert equity to cash. A refinance loan will involve various loan fees, just as with any other mortgage.
The bank designated in the Letter of Credit to reimburse the "available with" Bank which submits payment claims under the Letter of Credit.
REVOCABLE LETTER OF CREDIT
A revocable Letter of Credit can be revoked without the consent of the Exporter, meaning that it may be canceled or changed up to the time the documents are presented.
REVOLVING LINE OF CREDIT
A credit agreement (typically a credit card) that allows a customer to borrow against a pre-approved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.
A bank account that accrues interest in exchange for use of the money on deposit.
A credit card that is guaranteed by a security deposit so that repayment of the amount borrowed is assured. This is an option to begin to repair a bad credit history.
A loan that is backed by collateral.
A monthly fee a bank charges for handling a checking account.
STANDBY LETTER OF CREDIT
A written instrument issued by a bank (Issuing Bank) at the request of its customer (Applicant) on behalf of a beneficiary, whereby the Issuing Bank agrees to provide financial remedy in the event that the Applicant defaults on any terms and conditions specified under the Standby Letter of Credit.
Standby Letters of Credit are often issued at the request of Importers in favour of Exporters as financial security for goods purchased on Open Account.
A request made to a bank to not pay a specific check. If requested soon enough, the check will not be debited from the payer's account. Normally there is a charge for this service.
The loan term is the number of months that you will make monthly payments. If the loan term is the same as the payment calculation term, you will pay the loan in full during the loan term and no balance will be due. If the payment calculation term is greater than the loan term, a balance or "balloon payment" may be due at the end of the loan term. The number of years before a loan is paid in full; 15-, 20-, 25- and 30-year terms are the most common for home mortgages.
A term that applies to interest rates, where the actual rate applied depends on the balance on the account.
The evidence of ownership of a property.
An insurance policy that protects the lender (and sometimes the property owner as well) against loss due to disputes over the ownership of a property and defects in the title that were not found in the search of the public record. An insurance policy that insures the quality of the title and insures the lien priority of the mortgage.
A review of all recorded documents affecting a specific piece of property to determine the present condition of the title.
The date that a purchase was made or a cash advance was taken.
TRANSFERABLE LETTER OF CREDIT
A Letter of Credit that allows the Beneficiary (Exporter) to instruct its bank to transfer the credit in part or in whole to a Secondary Beneficiary.
The bank authorized by the Issuing Bank to transfer at the Beneficiary's request all or part of the Letter of Credit to another party.
Detailed process of evaluating a borrower's loan application to determine the risk involved for the lender. Underwriting usually involves an in-depth analysis of the borrower's credit history, as well as an examination of the value and quality of the subject property. The process by which credit and economic factors are used to determine whether a borrower qualifies for a loan.
UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (UCP)
A set of guidelines, rules and definitions governing Letters of Credit published by the International Chamber of Commerce. For those banks that subscribe, UCP facilitates the standardization of Letters of Credit.
A loan that is not backed by collateral.
An interest rate that changes and is determined by adding the index rate to the previously disclosed margin.
A transaction that electronically transfers money from one financial institution to another.
WIRE TRANSFER FEE
A fee charged by some lenders to cover the cost of wiring the mortgage funds to the appropriate parties, such as the title company or attorney, so that they are available for closing. For our comparison purposes, a wire transfer fee is considered to be a third party fee. However, some lenders may not charge for this service.
An amount of money taken out of an account.