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Glossary

Abstract of Title
A written history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.

Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically according to a pre-selected index.

Amortization
Payment of a debt in regular, periodic installments of principal and interest as opposed to interest only payments.

AmortizationSchedule
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.

Annual Percentage Rate (APR)
The annual percentage rate (APR) expresses a loan’s total finance charge over the lifetime of the loan. The APR includes the interest rate, fees, discount points, and mortgage insurance, and is therefore a more complete measure of a loan's cost than the interest rate alone. When shopping for a mortgage, you can use the APR to compare total costs of similar types of mortgages between lenders.

Annual Percentage Yield (APY)
The term annual percentage yield (APY) means the total amount of interest that would be received on a deposit, based on the annual rate of simple interest and the frequency of compounding for a 365-day period.

Appraised Value
A professional assessment of a property's value by an independent, licensed appraiser or automated valuation method. Typically, lenders require an appraisal to establish the fair market value and condition of a property to be used as collateral for a loan.

Automated Clearing House (ACH)
A nationwide electronic funds transfer system that provides for inter-bank clearing of electronic transactions (i.e., money is moved electronically between banks). Some examples of ACH transactions are Direct Deposit of payroll, Social Security and tax refunds, and direct payment of mortgages and utility bills.

Average Daily Balance
The daily ending balance divided by the number of days in the statement cycle.

Bill Pay
An online banking service that offers the convenience and control of managing and paying bills online. With First National Bank Online Bill Pay, you can pay any company or individual in the U.S., schedule one-time, recurring payments and choose to receive electronic bills from selected billers.

Cash to Close
Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.

Cash Reserve
A requirement by some lenders that buyers have sufficient cash remaining after closing to make the first mortgage payment.

Cash Out Refinancing
When the principal amount of a new mortgage involved in refinancing is greater than the principal amount outstanding of the existing mortgage being refinanced, and all or a portion of the equity is converted to cash

Cashier's Check
A check drawn on and issued by the bank. A cashier's check can be used instead of a personal check to guarantee that funds are available for payment.

Certificate of Deposit (CD)
(Time Account, Time Deposit, or CD) An FDIC-insured bank deposit account where you agree to keep the money on deposit for a specified period of time, usually anywhere from three months to several years. In exchange, the interest rate paid is usually higher than the rate paid on savings accounts. Accounts with higher balances and longer terms may earn higher rates. Funds withdrawn prior to "maturity" are subject to an early withdrawal fee. You can elect to let accrued interest compound in the account or have it paid to you monthly, quarterly or annually.

Closing Costs
Money paid by the borrower in connection with the closing of a mortgage loan. This generally involves an origination charge, discount points, and fees for required third party services, taxes and government recording fees.

Co-Borrower
Additional borrower(s) whose income contributes to qualifying for a loan and whose name(s) appears on documents with equal legal obligations.

Collateral
Property pledged as security for a debt, such as the real estate pledged as security for a mortgage.

Collection
The servicing procedure followed to bring a delinquent mortgage current and to file the required notices to bring foreclosure when necessary.

Commitment Letter
A formal offer by a lender stating the terms under which it agrees to loan money to a homebuyer.

Credit
A deposit of cash or checks made to your account that increases your available balance.

Debit
Any item that reduces the balance in your bank account. A check, ATM withdrawal, and Debit Card purchase are all examples of debits.

Debt-to-Income Ratio (DTI)
The percentage of your monthly income that is taken up by your monthly debt payments.

Direct Deposit
Direct Deposit is a free service that automatically deposits your recurring income received into any First National Bank checking or savings account that you choose. Income received from your employer, Social Security, pension and retirement plans, the Armed Forces, VA Benefits, and annuity or dividend payments may all qualify for Direct Deposit.

Federal Deposit Insurance Corporation (FDIC)
An independent agency of the United States government that protects customers from the loss of their deposits if an FDIC insured financial institution fails. The basic insurance amount is $100,000 per depositor per insured financial institution. Certain retirement accounts, such as Individual Retirement Accounts, are insured up to $250,000 per depositor per insured financial institution. Customers can increase the amount of money insured at any one financial institution by owning deposit accounts in different ownership categories (e.g., Individual Accounts, Retirement Accounts, Joint Accounts, Revocable Trust Accounts).

First Mortgage
A real estate loan that has priority over any subsequently recorded mortgages.

Fixed Interest Rate
An interest rate which does not change during the loan term.

Gift Letter
A written explanation signed by the individual giving the gift stating, "This is a bona fide gift and there is no obligation expressed or implied to repay this sum at any time.

Good Faith Estimate (GFE)
A document provided within three days of application which shows borrowers the approximate costs of the transaction, based on common practice in the locality. Under requirements of the Real Estate Settlement Procedures Act (RESPA), the loan originator must deliver or mail the GFE to the applicant.

Gross Income
Total income produced by a property before any expenses are deducted.

Gross Monthly Income
Total monthly income earned before tax and other deductions.

Hazard Insurance
A contract whereby an insurer, for a premium, undertakes to compensate the insured for loss on a specific property due to certain hazards (i.e. fire).

Home Equity Line of Credit
A form of revolving credit in which your home serves as collateral.

Home Equity Loan 
A revolving line of credit or loan based on the equity in the mortgagor's house. The property is the security for the loan, which is usable for any purpose.

Homeowners' Association Dues
The fees imposed by a condominium or homeowners' association for maintenance of common areas.

Homeowner's Insurance
An insurance policy that combines liability coverage and hazard insurance.

Housing Expense Ratio 
The relationship of a borrower's monthly payment obligation on housing (PITI and other applicable housing expenses) divided by gross monthly income, expressed as a percentage. Also called the top ratio.

Interest
A fixed amount paid on deposits or a fixed charge for borrowing money, usually a percentage of the amount deposited or borrowed.

Joint Account
A bank account owned by two or more people who are equally responsible for the account.

Joint Tenancy
An undivided interest in property, taken by two or more joint tenants. Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.

Judgment
Final determination by a court of the rights and claims of the parties to an action

Late Charge
The penalty a borrower must pay when a payment is made after the due date.

Lien
A legal claim or attachment against property as security for payment of an obligation.

Loan-To-Value Ratio
The ratio between the amount of a given mortgage loan and the lower of sales price or appraised value.

Loss Payable Clause
An insurance policy provision for payment of a claim to someone other than the insured, who holds an insurable interest in the insured property.

Minimum Balance
A specific amount of money that the bank requires to open or maintain a particular account, or avoid a service fee.

Nationwide Mortgage Licensing System and Registry (NMLS)
The Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act) was enacted as part of the Housing and Economic Recovery Act of 2008.  This Act requires an employee of our bank who acts as a residential mortgage loan originator (MLO) to register with the Nationwide Mortgage Licensing System and Registry (NMLS), obtain a unique identifier, and to maintain this registration.  Further, First National Bank of Waseca has adopted a written policy and procedures designed to assure compliance with these requirements and require all mortgage loan originators to follow these policies and procedures.

By accessing www.nmlsconsumeraccess.org you will find specific profile information for each Mortgage Loan Originator (MLO). This information will include the MLO’s publicly available registration information, any State mortgage licenses held (active or inactive), employment history, and any publicly settled disciplinary and enforcement actions.

Non-sufficient Funds (NSF)
A term used to indicate when an item such as a check, or other transaction presented for payment is returned unpaid because the available balance in your deposit account is less than the amount of the item. Also called "Returned item" or "bounced check." A Returned Item fee will apply.

Origination Charge
One amount that includes all charges (other than discount points) that all loan originators (lenders and brokers) involved in the transaction will receive for originating the loan. This includes any application, processing, and underwriting fees, and payments from the lender to the broker for origination.

Overdraft
A term used to indicate when an item such as a check, Debit Card purchase or other transaction presented for payment is paid even though the available balance in your deposit account is less than the amount of the item, thereby creating an overdraft (or negative balance) in your account. An Overdraft Fee will apply. 

Overdraft Protection
A service offered by the bank in which a credit account is linked to your checking account for the purpose of transferring or advancing sufficient funds to cover items when the available balance in your checking account is less than the amount necessary to cover the items. An Overdraft Protection annual fee applies.

Personal Identification Number (PIN)
A secret combination of letters or numbers you use to gain access to your account through an electronic device such as an ATM.

Principle, Interest, Taxes, Insurance (PITI)
In relation to a mortgage, PITI is an acronym for a mortgage payment that is the sum of monthly principal, interest, taxes, and insurance.

Point-Of-Sale (POS)
A merchant transaction (purchase or return) made through a store, telephone, or internet using an ATM Card or Debit Card for PIN or signature-based purchases.

Qualifying Ratios
Guidelines applied by lenders to determine how large a loan to grant a home buyer.

Routing Number
The nine-digit number on the bottom left hand corner of your checks, to the left of your account number. The routing number identifies the bank that issued the check. Every bank in the United States has at least one routing number.

Satisfaction of Mortgage
The recordable instrument issued by the lender verifying full payment of a mortgage debt.

Second Home (Vacation Home, Weekend Home) 
A residence other than the borrower's primary residence which the borrower intends to occupy for a portion of each year. Must be suitable for year-round occupancy.

Second Mortgage
A mortgage that has rights that is subordinate to the rights of the first mortgage holder.

Security
In lending, the collateral given, deposited, or pledged to secure the payment of a debt.

Seller Contributions 
Payment by the seller of some or all of the purchaser's usual closing costs.

Settlement Statement (HUD-1)
A form used at closing that gives an account of the funds received and paid at the closing, including the escrow deposits for taxes, hazard insurance, and mortgage insurance.

Stop Payment Order
A request to not pay a particular check/transaction that you have written on your account. Stop payment fee will apply.

Statement Cycle
A period of time for which activity on your account is reported on your statement. There is a start and end date for each statement cycle. Cycles may be monthly, quarterly, semi-annual, or annual.

Subordinate 
To make subject or junior to. For example, a loan on vacant land is made subject to a subsequent construction loan.

Survey
The measurement and description of land by a registered surveyor.

Sweep
An account that automatically transfers amounts that exceed (or fall short of) a certain level into another account. For example, money from a savings may sweep into a checking if you fall below $1. Monthly sweep fee will apply.

Variable Rate
An interest rate that can change on a periodic basis or when certain conditions are met.

Wire Transfer
First National Bank’s wire transfer system enables you to move money between financial institutions anywhere in the U.S. and throughout the world. Because wire transfers are immediate, they are also used for transactions requiring finality of payment. Wire transfer fees will apply.