AMCCU wants to help you be financially successful. The following information contains some commonly used financial terms. Knowing these terms will make your next visit more convenient.

Adjustable Rate Mortgage (ARM) - A mortgage in which the interest rate fluctuates during the life of the loan according to general economic conditions. A financial "index" is the basis that the lender uses to determine changes in the interest rate.

Amortization - The process of repaying a mortgage loan gradually, with equal periodic payments combining principal and interest. your payments are calculated so that the debt is paid off at the end of a predetermined period of time.

APR (Annual Percentage Rate) - A measure of the total cost of a loan expressed as a yearly interest rate.

APY (Annual Percentage Yield) - Reflects the interest being earned on a savings account including the dividends paid on the dividends.

Auto Care (Mechanical Repair Coverage) - Provides the same basic kind of vehicle mechanical protection as dealer service contracts and or manufacturer warranties plus many added bonuses. There are four different pans to choose from ranging from specific named parts to bumper to bumper coverage. The agreement may only be issued at the time of vehicle purchase unless the vehicle has at least one month and one thousand miles of the manufacturer's full warranty remaining on the date the agreement is purchased.

Automatic Payment - A service requested by the member to make payments on a loan via direct deposit, payroll deduction or family transfer.

Balloon Mortgage - Typically, a fixed rate mortgage with a 15 to 30 year amortization, that comes due with a lump sum (balloon) principal payment 3 to 7 years after closing. These loans are attractive because interest rates and monthly payments are lower than fixed rate loans, and payments usually remain the same over the life of the loan.

Collateral - Property and/or other assets pledged as security to the lender (mortgagee) for repayment of your debt.

Direct Deposit - The member's entire "check" is sent to the credit union electronically. A member can choose to allocate funds from their direct deposited check once it is received by the credit union. A loan payment can automatically be paid from a direct deposited check. Funds can also be deposited into other accounts such as a Christmas Club.

Equity - The difference between the market value (appraisal) of the home and your remaining mortgage balance. As you pay down the mortgage balance, your equity or ownership the home increases.

Family Transfer - In this transaction, the transfer of funds is done electronically the last Friday of each month form one account suffix to another account suffix. The transfer can be made into the same account, different account, and/or loan.

GAP Protection - Covers the difference between the actual cash or market value of a vehicle, as established by your auto insurance company and it's loan or lease pay off amount. GAP will pay your auto insurance deductible up to $1,000.00.

IRA (Individual Retirement Account) - This is a special savings plan set up by congress to help people save for retirement, 1st home purchases and college education. Any member interested in establishing an IRA account should consult a tax professional prior to choosing one.

Line of Credit - This is an open - end loan with a pre-approved credit limit. This loan has a revolving cash balance based upon how much the member borrows. What makes this loan open-ended is the fact that the member can borrow money as many times as they would like up to their specified limit. (Limit determined by normal credit review) As the member pay's on the balance of the loan, they can continue to borrow up to their credit limit.

Mortgage Note - A promissory note that you sign at closing which states your pledge to pay a specified amount at a set interest rate within a fixed period of time.

Payment Protection Plan - (Disability) this coverage is just on the primary member. Disability coverage is a group insurance policy designed to help make a member's monthly loan payment to the credit union if the member is totally and continuously disabled by a sickness or accident. the premiums for coverage are paid by the member and are added to the monthly loan payment. Coverage is a available for both open-end and closed-end loans. It is offered to only eligible members and is optional. (Life Insurance) Offered with single or joint coverage. Life coverage is a group insurance policy designed to pay the out standing loan balance of a borrowing member in the event of his or her death. The premiums for coverage are paid by the member and are added to the monthly loan payment. Coverage is available for both open-end and close-end loans. It is offered only to eligible members and is optional.

Payroll Deduction - A set dollar amount of a member's pay "check" is sent to the credit union. Allocation of funds can also be set up with payroll deduction as well as loan payments if the member requests to do so.

Principal - The outstanding balance owed on a loan, excluding interest. The sum of money on which interest is charged.

Private Mortgage Insurance (PMI) - If your down payment is less than 20 percent, you will be required to pay PMI - a fee for mortgage insurance. This insurance, provided by a private mortgage insurance company, protects the lender should you default on your house payments.

Title - Often called the deed, this is the document containing the evidence of someone's legal ownership of a specific property.

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