Financial Glossary A–Z
Plain-language definitions for common terms across mortgages, home buying, loans, credit, saving, investing, retirement and taxes.
A
Adjustable-Rate Mortgage (ARM)
A mortgage whose interest rate can change according to the terms of the loan after an initial period. Fixed vs. ARM guide
Amortization
The process of gradually reducing a loan balance through scheduled payments that typically include principal and interest. Amortization Calculator
Annual Percentage Rate (APR)
A standardized annualized measure of borrowing cost that can include interest and certain finance charges. APR vs. interest rate
Asset
Something with economic value that an individual or organization owns or controls.
B
Balance
The amount currently held in an account or remaining to be paid on a debt.
Bond
A debt investment in which an investor generally lends money to an issuer in exchange for promised interest and repayment terms.
Borrower
A person or organization that receives money from a lender and agrees to repay it under specified terms.
Budget
A plan for allocating income among spending, saving, debt payments and other financial goals.
C
Capital Gain
An increase in value realized when an asset is sold for more than its relevant cost basis. Capital gains basics
Closing Costs
Fees and expenses associated with completing a real-estate transaction or mortgage. Closing costs guide
Collateral
An asset pledged to help secure a loan and potentially available to the lender if contractual obligations are not met.
Compound Interest
Growth calculated on an amount that can include previously accumulated interest or returns. Compound Interest Calculator
Credit
An arrangement that allows a borrower to receive money, goods or services with an obligation to pay later.
Credit Score
A numerical measure used by certain credit-scoring systems to help summarize credit risk. Credit score basics
D
Debt
Money or another financial obligation owed to another party.
Debt-to-Income Ratio (DTI)
A comparison of recurring debt obligations with income, usually expressed as a percentage. DTI Calculator
Deduction
An amount that may reduce income subject to tax when permitted under applicable tax rules. Deductions vs. credits
Default
Failure to meet an obligation required by a loan or other financial agreement.
Down Payment
The portion of a purchase price paid upfront rather than financed. Down Payment Calculator
E
Effective Interest Rate
A rate intended to reflect the actual interest effect over a period, potentially including compounding.
Emergency Fund
Money set aside for unexpected expenses or temporary disruptions in income. Emergency fund guide
Equity
The value of an ownership interest; for a home, commonly the property's value minus debt secured by it.
Escrow
An arrangement where funds or documents are held by a third party until specified conditions are met; mortgage escrow can also refer to accounts used for certain property expenses.
F
Federal Funds Rate
In the United States, the rate associated with overnight federal funds transactions; it is an important benchmark in monetary policy and financial markets.
Fixed Rate
An interest rate that remains unchanged for the period specified by the agreement.
Fixed-Rate Mortgage
A mortgage with an interest rate that remains fixed according to the loan terms. Compare fixed and adjustable rates
Foreclosure
A legal process through which a lender may seek recovery involving property securing a loan after qualifying default conditions occur.
G
Gross Income
Income measured before specified deductions, taxes or other adjustments.
Growth Rate
The percentage change in a value over a stated period.
H
Home Equity
The difference between a home's value and debt secured by the property.
Homeowners Insurance
Insurance designed to cover specified risks related to a home and property, subject to policy terms and exclusions.
I
Inflation
A broad increase in prices over time that reduces the purchasing power of a unit of money when other factors are unchanged.
Interest
The cost paid for borrowing money or the return associated with lending or depositing money.
Interest Rate
A percentage used to calculate interest on a balance over a specified period.
Investment
An asset or allocation of money made with an expectation of future income, growth or another financial benefit, while generally involving risk. Investment Calculator
J
Joint Account
An account held in the names of more than one person, with rights and responsibilities determined by the account agreement and applicable law.
K
401(k)
A type of employer-sponsored retirement plan under U.S. tax law that can allow eligible workers to make contributions subject to applicable rules and limits.
L
Lender
A person or organization that provides funds under an agreement requiring repayment.
Liability
A debt or financial obligation owed by an individual or organization.
Loan Term
The period or contractual duration associated with repayment of a loan.
Loan-to-Value Ratio (LTV)
A ratio comparing a loan amount with a property's value or another specified value measure.
M
Marginal Tax Rate
The tax rate applicable to an additional portion of taxable income under a given tax structure. Tax brackets explained
Maturity
The date or point when a financial obligation or instrument reaches the end of its stated term.
Mortgage
A loan secured by real property, subject to the terms of the loan and applicable law. How mortgages work
Mortgage Preapproval
A lender's preliminary assessment of potential borrowing eligibility based on information reviewed at that stage; it is not necessarily a final loan approval. Preapproval guide
N
Net Income
Income remaining after specified taxes, deductions or expenses, depending on the context in which the term is used.
Net Worth
The value of assets minus liabilities at a particular point in time.
Nominal Interest Rate
A stated interest rate that may not reflect the full effect of compounding, inflation or fees.
O
Origination Fee
A fee that may be charged in connection with processing or originating a loan.
Outstanding Balance
The amount remaining unpaid on a loan, credit account or other obligation.
P
PMI (Private Mortgage Insurance)
Mortgage insurance that may apply to certain conventional mortgage loans depending on loan structure and borrower circumstances.
Prepayment
Paying some or all of an obligation earlier than its scheduled due date, subject to the agreement's terms.
Principal
The amount borrowed or the remaining loan balance before future interest charges.
Property Tax
A tax generally imposed by a government authority on real property according to applicable local rules and valuations.
Q
Qualified Retirement Plan
In U.S. usage, a retirement plan that satisfies specified requirements under applicable federal tax law.
R
Rate of Return
A measure of an investment's gain or loss relative to an amount invested over a stated period.
Real Return
An investment return adjusted to reflect inflation.
Refinancing
Replacing an existing loan with a new loan, often to change the rate, term, payment structure or other conditions. Refinancing guide
Retirement Income
Income available during retirement from sources such as savings, investments, pensions, government benefits or employment.
Risk
The possibility that an actual financial outcome will differ from what was expected, including the possibility of loss.
S
Savings Rate
The portion of income or another defined amount that is saved rather than spent.
Secured Loan
A loan backed by collateral according to the terms of the lending agreement.
Simple Interest
Interest calculated using a principal amount without adding previously accumulated interest to the calculation base.
Stock
An ownership interest in a corporation represented by shares, with rights depending on the class of stock and applicable rules.
T
Tax Bracket
A range of taxable income associated with a specified tax rate in a bracketed tax system. Tax brackets guide
Tax Credit
An amount that may reduce tax liability when allowed under applicable tax rules. Credits vs. deductions
Taxable Income
An amount of income subject to tax after applying relevant rules, adjustments or deductions.
Term
The stated duration of a loan, investment or other financial agreement.
U
Underwriting
The process of evaluating financial information, risk and eligibility when considering a loan, insurance policy or other financial transaction.
Unsecured Loan
A loan that is not secured by specified collateral, although the borrower remains obligated to repay according to the agreement.
V
Variable Interest Rate
An interest rate that can change according to an index, formula or other terms specified in an agreement.
Volatility
The degree to which the price or value of an asset changes over time.
W
Withholding
Money deducted from a payment, such as wages, and remitted for taxes or another required purpose under applicable rules.
Withdrawal Rate
The percentage or amount withdrawn from savings or investments over a specified period, often discussed in retirement planning.
X
XIRR
A calculation used to estimate an internal rate of return when cash flows occur on irregular dates.
Y
Yield
A measure of income generated by an investment relative to a specified value, commonly expressed as a percentage.
Year-to-Date (YTD)
The period beginning at the start of the current calendar or fiscal year and ending at the present measurement date.
Z
Zero-Coupon Bond
A bond that generally does not make periodic coupon interest payments and is instead issued or traded at a discount relative to the amount payable at maturity.
Definitions are simplified for general education. Meanings, rules and treatment can vary by product, jurisdiction and context. Numelios does not provide individualized financial, tax, investment or legal advice.