Whether you’re looking to open a checking account or take out a home mortgage loan, you’re bound to come across certain terms that may seem unfamiliar.

Banking acronyms are standard across the industry and are meant to streamline usage of the most common products and services. But–if you don’t know what you’re looking at, then you don’t know what you’re agreeing to. These are some of the most common acronyms you’re likely to find when banking.

APR

An annual percentage rate (APR) is one of the most common acronyms you’ll see, particularly for loans and credit card agreements. An APR is a representation of the costs associated with the money you borrow (interest) and incorporates any fees and costs that are part of the loan structure. It gives you an overall view of how much your loans cost each year, which is a more accurate number for comparison than only looking at interest rates.

APY

You’ll see the use of annual percentage yield (APY) when looking at interest-bearing accounts and certain investment vehicles. Think of the APY as the yearly rate of return on an account, which is calculated by factoring in a compounding interest period of one year. When you look at this number, you can more accurately compare investment options to each other because it gives you a single annual comparison percentage.

ARM

For those seeking out home mortgages, an adjustable rate mortgage (ARM) will be one of your main options. ARMs, as the name implies, are mortgages that have an adjustable interest rate, which means rates are tied to fluctuations based on increases or decreases on the federal level. ARMs typically have a fixed-rate period, so borrowers know what they will be paying for the beginning of their mortgage period.

CD

When you’re looking for savings options, a certificate of deposit (CD) is a vehicle for putting aside money to grow, without being able to access it easily. In essence, a lender will issue a CD as a promissory note, with restrictions on when money can be withdrawn. Once the CD has matured, borrowers are free to withdraw principal and interest, but until then, they may not have access to the funds or may need to pay an early withdrawal penalty.

IRA

An individual retirement account (IRA) is a savings vehicle that you control, as opposed to an employer-issued 401(k). As with any retirement account, the idea is that you contribute money and assets now, to be withdrawn in the future when you hit retirement age. Therefore, like a CD, if you want to withdraw money early you’ll be hit with a penalty fee. Typically, the money you contribute to an IRA is tax-free, and the account itself is not subject to taxes, so a significant benefit of IRAs is minimizing your tax burdens. That being said, there are different types of IRAs, and each has a different structure regarding how taxes are imposed.

FHA

A Federal Housing Administration (FHA) loan is a type of mortgage that is insured by the government. These loans include mortgage insurance as part of their monthly payments, which ensures that the lender–by way of the government–is protected from any losses. FHA loans offer benefits for first-time homebuyers, including requiring as little as 3.5% for a down payment if credit scores are higher than 580. However, FHA loans are also available to people with credit scores below this number, although down payments are typically raised to 10%.

From checking accounts to home mortgages, the banking industry is full of acronyms that you must become familiar with to make informed financial decisions. If you’re ready to learn more, answer a few questions here, and a home lending expert will contact you.

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