When the mortgagee has given you the funds, they gain a security interest in the property you purchase. This means they’ve got a monetary investment in the property. As the mortgagor, you’ll have a legal interest; this is because the legal deed will belong to you. You’ll need to make payments on the mortgage, which usually includes a combination of both principal and interest. The mortgagee is protected against default on the loan by the ability to foreclose on the property....

Niche banks focus on personalization, offering unique tools and features built to meet the needs of underserved populations. So, if you feel like your current institution doesn’t truly “get” your lifestyle, then a niche bank may be worth looking into. Here’s a closer look at how they work. Definition and Examples of a Niche Bank Niche banks are smaller, more specialized banking institutions that focus on a specific area or market....

Collateral is an asset that can be seized and sold to repay a loan. A home loan is secured by the home being financed. In most cases, lenders approve personal loans by evaluating your creditworthiness. Personal loans are relatively easy to apply for and qualify for when compared to home, auto, or other types of loans. That makes them useful for everything from small home improvements to expensive purchases. You can use the money for almost anything, but it’s wise to borrow only as much as you need—and only for things that improve your finances or make a significant impact on your life....

How a Prepaid Tuition Plan Works With college costs soaring, it’s more important than ever for parents to start saving for their children’s education early if they have the means to do so. In an effort to make school costs more manageable, some states offer a prepaid tuition plan designed to reward savers for thinking ahead. The crux of a prepaid tuition plan is that it enables a saver (a parent, grandparent, or other guardian) to pay for the future expenses that a beneficiary (usually a student) will incur at some point in the future at today’s rates, thereby guarding against tuition inflation....

The exact definition of a principal residence can vary based on the agency making the determination. For example, the IRS states that a principal residence means “your main home.” Alternate name: primary residence, domicile Even if you own multiple homes or split your time equally between multiple locations, such as if you live with family for half the year and rent your own place elsewhere for the other half, you only have one primary residence....

In some cases, a friendly takeover occurs, where the target company’s board of directors consents to the deal, and the two companies negotiate terms they can both agree on. In other cases, a takeover is considered hostile, and the acquiring company goes directly to the shareholders to gain control. There are plenty of examples of friendly acquisitions. Take the friendly takeover of Google acquiring fitness company Fitbit, for example. Negotiations for the acquisition began in late 2019, and the friendly takeover was finalized at the start of 2021....

Definition A tiered-rate savings account can help you with your savings goals since the more interest you’re able to earn, the faster your money will grow and reach your financial target. The difference between tiered-rate accounts and other deposit accounts lies in how interest is applied. If the balance exceeds one of the tiers, as you add more money to the account, the next level of interest may kick in if your balance has surpassed the tier threshold....

Annual exclusion gifts are usually in the forms of cash, stocks, bonds, portions of real estate, or forgiving debt on a family loan in an amount that doesn’t exceed the annual gift tax exclusion. The federal government sets the allowable limits for tax-free giving each year. When you give someone a gift with a value of less than the exclusion limit, you don’t need to pay taxes on it. However, if your gift is over the limit, you’ll need to report the amount that exceeded the limit on IRS Form 709....

Let’s go over how at-the-money options work and how they are valued, as well as learn more about other types of options. Definition and Examples of At-the-Money Options At-the-money options are options with strike prices that are equal to the market price of its current underlying stock. Where the option’s strike price is relative to the underlying stock’s price is called “moneyness.” Options can be “in the money,” “at the money,” or “out of the money,” as you’ll learn in more detail below....

The way the average person banks has changed a lot over the years. Discover the many different aspects of an electronic funds transfer and whether it’s the right decision for your financial situation. Definition and Example of Electronic Funds Transfer In simple terms, an electronic funds transfer, or “EFT,” is merely the digital way of transferring funds from one bank account to another. This process, also known as “electronic banking,” allows you to move money electronically....

The employee is hired by the employer after an application and interview process results in their selection as an employee. This selection occurs after the applicant is found by the employer to be the most qualified of their applicants to do the job for which they are hiring. The terms of an individual’s employment are specified by an offer letter, an employment contract, or verbally. In a non-union workplace, every employee negotiates on their own; the terms of employment are not universal between all positions....

For example, if you’ve ever signed up for a savings account, you’ve likely heard or seen the term “annual percentage yield” or “APY.” Acronym: APY How Annual Percentage Yield Works When you deposit funds into a savings account, money market, or certificate of deposit (CD), you earn interest. APY can help you tell how much interest you’d earn on the account over one year. It’s based on the interest rate and the frequency of compounding, and it shows you the interest you would earn on the principal (original deposit) plus interest on earnings....

For example, U.S. Bank has explained that mortgage underwriting “can take anywhere from a few days to several weeks.” However, the technology employed in automated underwriting can greatly reduce the time required to evaluate potential borrowers, keeping it to the shorter end of this time frame. How is it able to process a mortgage application so much quicker than the manual underwriting process? How Automated Underwriting Works “Automated underwriting is essentially an algorithm making the loan decision—or at least a recommendation for a loan decision,” explained Aaron Dorn, chairman, president, and CEO of Studio Bank in Nashville, Tennessee, in an email to The Balance....

Alternative names: Bats exchange, Better Alternative Trading Systems Bats’ entry into the European market in 2008 quickly pushed it to prominence on the global exchange market. As a part of the Chicago Board Options Exchange (CBOE), Bats is now one of the largest U.S. equities exchanges in the world. The merger of the two companies achieved economies of scale in operational costs. It also made CBOE a stronger competitor against the New York Stock Exchange and the Nasdaq....

You can buy crime insurance from insurers that sell business policies. Coverage may be purchased as a separate policy or added to a commercial property or business owners policy (BOP) via an endorsement. Types of Business Crime Insurance Coverages Commercial crime insurance typically includes coverage for a number of different situations, including employee theft, forgery, computer fraud, and more. The most common coverages are outlined below. Employee Theft Business crime insurance is also sometimes called employee theft or employee dishonesty coverage....

In general, to get child support, you’ll need to apply for it through state or tribal courts. In some cases, though, you can reach an agreement with your partner without going to court. Child support is more than just court-ordered monetary payments. It also helps custodial and non-custodial parents with additional services such as: Establishing paternityLocating the other parentEnforcing any child support ordersCollecting and distributing payments in some statesReviewing and revising child support orders where appropriate...

d3sign / Getty Images When your insurance provider receives your premium payment, they might not record the cash as revenue immediately. Instead, they may need to wait until they’ve completed the services they agreed to provide in exchange for the premium, such as covering certain risks for you during the policy term. For example, if you pay your car insurance premium in full at the beginning of an annual policy, your insurer won’t recognize the revenue until some of the term has passed....

It’s not a bad thing to trade on leverage if you know what you’re doing and understand the risks. But if that’s not the case, it’s extremely risky and you could potentially lose a lot more than you can afford to. Here are the different ways you can use leverage to trade in stocks: Trading on Margin A simple example is trading on margin. Margin is money you borrow from your broker to buy a security, using other securities in your brokerage account as collateral....

For example, assume you win $1 million from the lottery but you choose to receive payments of $100,000 per year for the next 10 years. While that adds up to $1 million, what is your prize really worth in today’s dollars? If there’s an option for a lump sum payout, what amount is equivalent to that series of payments? NPV can help you figure this out. The value of your payments depends on what you do with the money and how much you might earn if you invest the funds....

For instance, suppose a catering business offers catering services in the client’s home. Instead of advertising via a newspaper insert that goes out to everyone, the caterer would first identify the target market for its services. It could then target the desired market with a direct mail campaign, flyer delivery in a particular residential area, or a Facebook ad aimed at customers in a specific area, thereby increasing its return on investment in marketing and bringing in more customers....