Glossary of Financial Terms

Account – A history or record of all transactions and their dates. Entries are listed as a debit or a credit and a current balance, if any, is shown.

Amortization – A payment plan for a loan that includes equal payments to be made to a creditor (or lender) at regular periods of time during the life of the loan (the amortization period). Each payment covers interest for the previous period and the remainder of the payment is applied to the principal that is owed. If every payment is made on time and in full over the amortization period, the loan will be completely repaid at the end of the amortization period.

Annual percentage rate (APR) – A rate that allows borrowers to compare one type of loan to another. APR is the annual cost of borrowing money under a particular type of loan and is required to be disclosed by the lender under the American Truth in Lending Act, Regulation Z.

Appraisal – An estimate of the value of a property on a certain date given by a qualified person, usually after an inspection of the property.

ARM – Adjustable rate mortgage and also known as a Variable Rate Mortgage. A loan with an interest rate that changes according to an index—such as the federal prime rate or the interest rate paid on government bonds—over the life of the mortgage. The change in interest rate will result in a change in the regular payments due.

Asset – A thing of value, such as a checking or savings account, a car that is paid off, or a house.

Bankruptcy – Being unable to pay your debts to the point at which you submit yourself to the protection of the state. A person or business may voluntarily assign himself into bankruptcy or may be petitioned into bankruptcy by his creditors.

CAP fund – The PIH Office of Capital Improvements administers The Capital (CAP) Fund. The Fund provides funds annually to Public Housing Agencies (PHAs) for the development, financing, and modernization of public housing developments and for management improvements.

Closing costs – Money paid to complete the home buying transaction that are over and above the purchase price. Closing costs can be added to the amount of your loan and may include: legal fees, taxes, mortgage application charges, interest adjustments, registration fees, appraisal fees, etc.

Credit rating – An evaluation of your ability to manage debt based on an analysis of your credit history. You may be charged for a lender to order a copy of your credit report, which lists your credit rating.

Equity – The difference, in dollars, between the market value of a property and the principal owing on debts secured against the property. The amount of money the owner will be able to keep from a sale transaction once the mortgages are paid out. Also known as "owner's interest."

Escrow account – A form of trust account in which advance payments are held on your behalf to pay certain expenses associated with your home, such as taxes or private mortgage insurance.

ICDBG – Indian Community Development Block Grant. The ICDBG Program provides eligible recipients with grant money to use in developing Indian and Alaska Native Communities, including decent housing, a suitable living environment, and economic opportunities.

IHS – Indian Health Services. Members of federally recognized Indian tribes and their descendants are eligible for services provided by the Indian Health Service (IHS). The IHS is an agency within the Department of Health and Human Services.

Interest – Sometimes called interest rate. The money the bank pays you for keeping your savings at the bank. Interest is also what you may be charged on a credit card or department store card, which is the amount you pay to “borrow” their money.

Liability – The debts of a person or how much money they owe.

Mortgage – A loan which is secured against property (i.e. registered on title as a claim on the property). Often used to purchase the property itself.

NAHASDA – Native American Housing Assistance and Self Determination Act. The NAHASDA Act of 1996 is designed to provide federal assistance for Indian tribes in a manner that recognizes the right of tribal self-governance. NAHASDA reorganizes the system of federal housing assistance to Native Americans by eliminating several separate programs of assistance and replacing them with a single block grant program.

ONAP – Office of Native American Programs. ONAP ensures that safe, decent, and affordable housing is available to Native American families, creates economic opportunities for tribes and Indian housing residents, assists tribes in the formulation of plans and strategies for community development, and assures fiscal integrity in the operation of the programs.

Per capita payments – Payments made to individual tribal members from income received by the tribe for activities such as gambling casinos.

PIH – The Office of Public and Indian Housing (PIH) ensures safe, decent, and affordable housing, creates opportunities to help residents become financially independent and assures the financial dependability of all program participants.

Principal and interest – A blended payment, usually paid monthly, that is enough to pay off accumulated interest and a portion of the principal on your mortgage loan.

Private mortgage insurance – An insurance policy issued by a company to protect a lender against the default of the borrower. PMI is usually waived once the loan amount is decreased to 80 percent of the value of the home.

Repossession – When a creditor seizes property, such as a car or a house, because payment has not been made.

Term – The period of time during which the loan contract is active, during which the borrower makes periodic (usually monthly) payments to the lender and at the end of which the balance of the loan becomes due and payable.

Title insurance – Provided by companies who research information to protect property buyers and lenders from problems that might affect real estate title ownership.

Trust services – A relationship between an individual and an organization (such as a tribe) or another person who acts on behalf of the individual in order to manage money or property that is owned by the individual.