Personal Finance Glossary

A- credit

The best credit rating that you can have. A FICO score above 720 will get you the best offer the lender can offer and the best interest rates. When applying for a mortgage loan, you will want your credit score to be as high as you can make it. Start working on this immediately.

Abandonment value

Abandonment value is the amount which could be recovered from an asset or project if it were liquidated or terminated immediately. Investors would compare an asset's abandonment value to that asset's projected earnings to decide whether or not to continue supporting that asset.

Academy of Financial Divorce Practitioners

The Academy of Financial Divorce Practitioners educates and certifies financial service professionals in the financial consequences of property settlements, child support, and other divorce-related issues. Certified members are awarded the CFDP (Certified Financial Divorce Practitioner) designation.

Accumulation

Accumulation refers to the investment practice of buying securities over time, while reinvesting dividends and related income, with the objective of building a sizeable portfolio. With reference to corporations, accumulation can mean the reinvestment of earnings to fund business growth.

Assumable mortgage

A loan that allows a home buyer to take over a seller's mortgage when purchasing a home. The borrower must qualify to assume the loan. When you assume a mortgage you inherit both the interest rate and monthly payments. It can save you money if the exsiting interest rate on the mortgage is lower than the current market rate and closing costs are avoided as well. If the loan comes with a stipulation that the mortgage has to be repaid upon the sale of property then it is not termed as assumable.

Application

An application is a form poularly known as Form 1003. It is needed to apply for a mortgage and provides information about the prospective borrower/mortgagor like his savings, income, assets, debts as well as the security to be offered.

ACRES (accelerated cost recovery system)

Commonly referred to as ACRS (pronounced "acres"), a method of depreciating property rapidly for tax purposes. ACRS property is divided into classes and each class has a predetermined time period over which it may be depreciated. ACRS generally is used for property placed in service after 1980 and by Dec. 31, 1986. The modified system that has replaced ACRES is known as MACRS, or Modified Accelerated Cost Recovery System.

Accelerated payments

Accelerated payments are amounts applied to a loan over and above the required repayments. These additional, unscheduled payments lower the balance of debt outstanding, and can lead to interest savings and early pay-off.

Accident and health insurance

Accident and health insurance provides coverage for accidental injury, illness, or death. Benefits include payment of medical expenses and payment of income. Some programs also allow for debt payments while the insured is unable to earn income.