annual membership or maintenance fee
An annual charge for access to a financial product such as a line of credit, credit card or account. The fee is charged regardless of whether or not the product is used.
annual percentage rate (APR)
The cost of credit, expressed as a yearly rate. For closed-end credit, such as car loans or mortgages, the APR includes the interest rate, points, broker fees and other credit charges that the borrower is required to pay. An APR, or an equivalent rate, is not used in leasing agreements.
Fees charged when you apply for a loan or other credit. These fees may include charges for property appraisal and a credit report.
A large extra payment that may be charged at the end of a mortgage loan or lease.
cap (interest rate)
A limit on the amount that your interest rate can increase. Two types of interest-rate caps exist. Periodic adjustment caps limit the interest-rate increase from one adjustment period to the next. Lifetime caps limit the interest-rate increase over the life of the loan. By law, all adjustable-rate mortgages (ARMs) have an overall cap.
closing or settlement costs
Fees paid when you close (or settle) on a loan. These fees may include application fees; title examination, abstract of title, title insurance and property survey fees; fees for preparing deeds, mortgages and settlement documents; attorneys’ fees; recording fees and credit report fees. Under the Real Estate Settlement Procedures Act, the borrower receives a good faith estimate of closing costs within three days of application. The good faith estimate lists each expected cost as an amount or a range.
The maximum amount that may be borrowed on a credit card or under a home equity line of credit plan.
The difference between the fair market value of the home and the outstanding balance on your mortgage plus any outstanding home equity loans.
The economic indicator used to calculate interest-rate adjustments for adjustable-rate mortgages (ARMs) or other adjustable-rate loans. The index rate can increase or decrease at any time. See also selected index rates for ARMs over an 11-year period for examples of common indexes that have changed in the past.
The percentage rate used to determine the cost of borrowing money, stated usually as a percentage of the principal loan amount and as an annual rate.
The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.
The lowest amount that you must pay (usually monthly) to keep your account in good standing. Under some plans, the minimum payment may cover interest only; under others, it may include both principal and interest.
points (also called discount points)
One point is equal to 1% of the principal amount of a mortgage loan. For example, if a mortgage is $200,000, one point equals $2,000. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages (ARMs) to cover loan origination costs or to provide additional compensation to the lender or broker. These points usually are paid at closing and may be paid by the borrower or the home seller, or may be split between them. In some cases, the money needed to pay points can be borrowed (incorporated in the loan amount), but doing so will increase the loan amount and the total costs. Discount points (also called discount fees) are points that you voluntarily choose to pay in return for a lower interest rate.
If stated in your credit agreement, a creditor’s, leaser’s or assignee’s legal right to your property (such as your home, stocks or bonds) that secures payment of your obligation under the credit agreement. transaction fee
Fee charged each time a withdrawal or other specified transaction is made on a line of credit, such as a balance transfer fee or cash advance fee.
An interest rate that changes periodically in relation to an index, such as the prime rate. Payments may increase or decrease accordingly.
where to go for help
For additional information or to file a complaint about a bank, savings and loan, credit union or other financial institution, contact one of the following federal agencies, depending on the type of institution.
state –chartered bank members of the Federal Reserve System
Federal Reserve Consumer Help
PO Box 1200
Minneapolis, MN 55480
888.851.1920 (toll free)
877.766.8533 (TTY) (toll free)
877.888.2520 (fax) (toll free)
national banks and national-bank-owned mortgage companies*
Office of the Comptroller of the Currency (OCC)
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010
800.613.6743 (toll free)
federally chartered credit unions**
National Credit Union Administration (NCUA)
Office of Public and Congressional Affairs
1775 Duke Street Alexandria, VA 22314
(toll free) 703.518.6409 (fax)
For state-chartered credit unions, contact the regulatory agency in the state in which the credit union is chartered www.ncua.gov/consumerinformation/consumer%20complaints/statechartered.htm
federally insured state-chartered banks that are not members of the Federal Reserve System
Federal Deposit Insurance Corporation (FDIC)
Consumer Response Center
2345 Grand Boulevard, Suite 100
Kansas City, MO 64108
877.ASK.FDIC (877.275.3342) (toll free)
savings and loan associations***
Office of the Comptroller of the Currency
1700 G Street, NW
Washington, DC 20552
800.842.6929 (toll free)
800.877.8339 (TTY) (toll free)
mortgage companies and other lenders
Federal Trade Commission (FTC)
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
866.FTC.HELP (877.382.4357) (toll free)
For more resources on mortgages and other financial topics, visit www.federalreserve.gov/consumerinfo
* Banks with "National" in their name or "N.A." after the name.
** Credit unions with "Federal" in their name.
*** Federally chartered and some state-chartered associations.