Earnest money deposit

Initial sum of money given by the buyer to the seller in order to assure the purchase transaction.


The right to use the land of another for specific purpose as distinguished from the right to possess the land.

Effective age

The estimate given by the appraiser on the physical condition of a building. The exisitng age of the building may be shorter of longer than its effective age.


Is anything that restricts the fee simple title to property is an encumberance, It could be in the form of mortgages, leases, easements etc.

Equal credit opportunity act (ECOA)

A requirement by Federal Law stipulating that lenders and other creditors have to make credit available equally to all without discrimination or prejudice based on color, caste, creed, race, sex, national origin, marital status or receipt fo income from public assistance programs.


An individual's financial interest in his own property. It is the difference between the fair market value and the balance of the loan or mortgage amount still outstanding.


A legal arrangement whereby money, property, deed, title etc are delivered to a third party or escrow agent to be held in trust pending the fulfillment of a contractual agreement. Once the event occurs, this deposit is returned by the escrow agent to the proper recipient.

Escrow account

An account held by the lender in which the borrower puts in an amount over and above the required sum of the principal and the interest. The additional money put in is used by the lender to pay for items like property taxes and homeowner's insurance when due. See further Escrow

Escrow analysis

The lender performs a periodic usually annual examination of all escrow accounts to ensure that amounts being collected will pay for the anticipated expenditures like taxes, insurance etc. See further Escrow

Escrow disbursements

When funds put in the escrow accounts are used to pay extra expenses like mortgage insurance, hazard insurance and property taxes as and when they become due.\n\nSee further Escrow


Property owned by an individual. All real and personal property owned by an individual at the time of death.


The legal removal of an occupant from real property.

Examination of title

An examination by a title company of public records and other documents to determine the chain of ownership of a property.

Early closing cost reimbursement

Some lenders waive underwriting costs when a line of credit is opened in anticipation of future profits. If the account closed early, the lender may impose those fees retroactively.

Early decision

An opportunity that gives students the chance to apply to colleges and get an answer before the regular admissions deadline. In most colleges, early decision programs require that the student commit to attending the school if accepted under the early decision program.

Early occupancy

This option allows the buyer to move into the property before the sale is closed.

Early termination charge

In auto leasing, a charge that the lessee must pay if the car is turned in before the term of the lease is over.

Early withdrawal penalty

The total sum of the money you earn. This includes any wages, salaries, tips, net earnings (if you're self-employed) and any other income received for personal services. Investment income, such as dividends and interest, are not included as earned income.

Earned income

The total sum of the money you earn. This includes any wages, salaries, tips, net earnings (if you're self-employed) and any other income received for personal services. Investment income, such as dividends and interest, are not included as earned income.

Earnest money

Money given by a buyer to a seller when making a formal offer to demonstrate that the buyer is serious and committed. This may also be called a deposit.

Earnings per share

The net earnings of a company's profitability divided by the average number of shares of its common stock. This serves as a way of expressing a corporation's profitability.

Educational bond program

Allows the holder of series EE and series I bonds to exclude federal income tax when the bonds are used to pay for a qualified higher educational expenses.

Education Individual Retirement Arrangement

A savings plan created so that parents could make nondeductible contributions to an account for a child under age 18. This program is a trust or custodial account for the child, who is the designated beneficiary of the account but not technically a retirement account.

Education IRA

A savings plan which is set up to pay for a child's education. They allow for tax-favored savings to help pay a child's public or private schooling costs at any level.

EEM (Energy Efficient Mortgage)

An FHA program that helps homebuyers save money on utility bills by helping them to finance the cost of integrating energy efficiency features to a new or existing home as part of the home purchase. If a home owner has lower utility bills they can allocate a larger portion of their income to the cost of their home.


Electronic funds transfer. The transfer of money between accounts made by the consumer using systems such as automated teller machines (ATMs), and electronic payments of bills.

Eminent Domain

The constitutional right of a government to take over private property for public use. The most common use of this right is for public projects like roads, military installations, and public buildings. The owner of the property is typically given compensation.

Employer assisted housing

An agreement between an employer and a lender to help employees finance and buy a home.

Empty nesters

People whose children have grown up and moved out. It is around this time that they may be in the market for a smaller house.


A home improvement that illegally extends onto another owner's property or impedes the neighbor's use of that property, such as a poorly placed fence.


This is a way to prevent anyone but the intended recipient from reading the information by obscuring the information and making it unreadable without a code or special knowledge.

End loan

The final mortgage loan to purchaser of a property, as opposed to a construction or other interim loan.

Environmental impact statement

This is a required evaluation, mandated by the government, of how construction will affect the environment surrounding a site.


One of the three credit bureaus, also Experian and TransUnion.

Escrow agent

A neutral third party who is the keeper of the documents and money in a real estate transaction. When all of the conditions are met, the escrow agent releases the documentation and monies. This can also be known as an Escrow Company.

Escrow closing

The final transfer of the title to the buyer after all of the conditions and paperwork have been met and completed.

Estate tax

A tax based on the market value of property, less any liabilities, at the time of the owner's death.

Estimated Closing Fees

An estimate of the fees that must be paid on or before the closing date by the buyer and/or seller for services. Typically, the average payment is between 2 % and 5% of the loan amount. This will vary by lender, property location, and type of mortgage.

Estimated Financial Contribution

The amount of college tuition the student and his or her family (if applicable) are expected to contribute to the overall cost of higher education. This number is determined by filling out the Free Application for Federal Student Aid, or FAFSA.

Excess wear charge

The lessee must pay charges for exceeding the limits when turning in the car at the end of the lease. Most dealers will assess a normal wear and tear charge an outline it in the terms of the lease at the lease's inception. Anything above the initial agreement will accrue this charge.

Exclusive listing

This legal agreement gives one real-estate agent the right to sell a property for a specified period. The owner retains the right to sell the property him or herself without paying the agent a commission if the property is not sold within the time allotted.

Exotic mortgage

Exotic mortgage is a term used to describe any nontraditional mortgages. These mortgages allow homeowners to be able to afford high-priced homes. Buyers are sometimes allowed to defer principal or interest payments to a later date. These mortgages are historically risky for both the borrower and the lender.


One of the three credit bureaus along with Equifax and Transunion.

Early action

Early action is an optional admission process offered by some universities and colleges. Students can apply to the school earlier and receive a more rapid response on their application. Early action applications are generally due by November 1 of the student's senior year; the school then notifies the student of the decision before January.

Early withdrawal

Early withdrawal is the removal of deposited funds prior to a maturity date, or prior to the achievement of a prescribed milestone. Early withdrawal is commonly associated with certificates of deposit (CDs), where funds are supposed to remain on deposit for a fixed time period. If the funds are withdrawn early, the depositor is assessed a penalty fee. Early withdrawal can also refer to the removal of funds from a U.S. retirement account prior to the accountholder reaching the age of 59 1/2.

Earned income credit

Earned income credit, or EIC, is a tax credit available to low-income, working households in the U.S.

Earnings credit rate

The earnings credit rate is a factor used to discount bank service charges for business deposit customers. The rate, which is often tied to the U.S. Treasury bill rate, is applied to a customer's account balance to determine the fee reduction. Customers with large deposits therefore pay lower fees.

Easy monetary policy

An easy monetary policy is characterized by reductions in short-term interest rates. A central bank, such as the Fed, sets the monetary policy for a country or political entity. Monetary policies are implemented primarily through interest rate decisions.


An Echeck is an electronic draft ordering a bank to make a payment from one account to another. Echecks have the same function and purpose as paper checks.

Education Bond Program

The Education Bond Program is tax legislation that allows holders of U.S. savings bonds to cash in those bonds tax-free, as long as the proceeds are used to pay for qualifying educational expenses.

Effective annual interest rate

Effective annual interest rate is the percentage rate that represents one year's yield on an investment, including the effects of compounding. When interest is compounded more often than once a year, the effective annual interest rate will be higher than the stated rate.

Effective federal funds rate

The effective federal funds rate is a weighted average of interest rates charged by banks when they lend short-term funds to other banks. This rate is usually quoted daily.


E-file is an IRS program that allows U.S. taxpayers to submit their returns electronically. The benefits of e-filing are expedited processing and reduced paper usage.


EIN or employer identification number, is a number assigned to businesses and other entities for tax purposes. A business would obtain an EIN by making an application with the IRS.

Electronic cash

Electronic cash is money that changes hands electronically, usually by way of the Internet.

Electronic check

An electronic check, or Echeck, is an electronic draft ordering a bank to make a payment from one account to another. Echecks have the same function and purpose as paper checks.

Electronic check presentment

Electronic check presentment, or ECP, is a method of initiating the transfer of funds as ordered on a check. With ECP, the depositing bank sends the paying bank an electronic notification of the check details to begin processing. The actual paper check is then forwarded at a later date.

Electronic commerce

Electronic commerce, also known as e-commerce, is the exchange or sale of goods and services via the Internet.

Electronic filing

Electronic filing, or e-file, is an IRS program that allows U.S. taxpayers to submit their returns electronically. The benefits of e-filing are expedited processing and reduced paper usage.

Electronic funds transfer

Electronic funds transfer, or EFT, is the movement of money from one account to another that's initiated electronically, such as through an ATM.

Electronic wallet

An electronic wallet is a digital account that holds credit card and other financial information. An individual or business having an electronic wallet can make Internet purchases at participating retailers without having to type in identification and credit card information manually.

Eligible accounts

Eligible accounts, in lending, are accounts receivable that can be included in a corporate borrower's collateral base. Financial institutions will often take a company's accounts receivable as security in a debt facility. Since some accounts receivable have a higher chance of becoming uncollectible than others, the loan agreement will define eligible accounts and ineligible accounts. Eligible accounts are included in the collateral base, and ineligible accounts are not.

Emergency fund

An emergency fund is a supply of money that's being saved for unexpected circumstances. Personal finance experts recommend that households keep enough cash on hand to cover three to six months of living expenses. Most people choose to keep the money in a highly liquid account, such as a savings account.

Employee stock option

An employee stock option is the right of an employee to purchase shares of company stock at a certain price. Employee stock options are granted to employees by the employer, usually as an incentive. Employee stock options are not traded on an exchange.

Employer identification number

Employer identification number, or EIN, is a number assigned to businesses and other entities for tax purposes. A business would obtain an EIN by making an application with the IRS.

Employer-assisted housing

Employer-assisted housing is any type of program that involves a company providing for the living arrangements of its employees. Examples include employer-sponsored rental assistance, or a partnership between an employer and lender that makes home financing more affordable. The purpose of employer-assisted housing is to make it possible for employees to live close to the workplace.


An endorsement is a signature that authorizes the transfer of a negotiable instrument. Commonly, personal checks require the endorsement of the payee in order to be deposited or cashed. Endorsement can also refer to an insurance policy rider or amendment.


An endowment is an income-earning asset that's been donated to a non-profit group or institution. The income from the asset, and sometimes part of the principal, are to be used for a specific, donor-requested purpose. Most endowments are in the form of cash and securities.

Endowment loan

An endowment loan is a specialized mortgage. During the life of the loan, the lender receives interest-only payments from the borrower. The principal payments are deposited into an endowment fund, where they earn interest and/or investment income. The full principal balance on the mortgage is then repaid at loan maturity.

Enrolled agent

An enrolled agent is a certified professional who represents taxpayers in IRS disputes and interactions.

Enterprise zone

An enterprise zone is a bounded area where programs are in place to stimulate economic growth. Usually, businesses operating within an enterprise zone are offered tax breaks or government-funded assistance.

Equal Credit Opportunity Act

Equal Credit Opportunity Act is a federal regulation that forbids discrimination on the basis of certain factors in credit transactions. Lenders may not use race, color, religion, age, marital status, etc. to qualify an applicant for debt. The only factors which can be used are related to the applicant's financial condition, such as income, credit history, and debt leverage.

Equated Monthly Installment - EMI

Equated monthly installment, or EMI, is a fixed principal and interest payment made against a debt each month, with the goal of paying off the debt over time. Usually, the borrower isn't allowed to pay more than the EMI each month.

Equitable distribution

Equitable distribution is a legal term for the fair division of property during a bankruptcy or divorce. Equitable distribution is different from the community property concept, which generally calls for splitting the assets evenly between the two parties in a divorce.

Equity income

Equity income is profit distributed to owners (i.e., equity holders). An individual investor earns equity income when one of his stock holdings pays a dividend. A company generates equity income when one of its subsidiaries is profitable. The term can also describe a type of mutual fund, where the holdings are chosen based on the ability to generate both dividend income and value growth.

Equity kicker

An equity kicker is an ownership incentive, such as a warrant, that's included in a debt arrangement. Equity kickers are added into the deal to make the debt investment more attractive.

Equity market

Equity market is a synonym for stock market. The term refers to an organized system of buying and selling stocks.

Equity mortgage

An equity mortgage is a real estate property loan that gives the lender a share of the proceeds when the property is sold. In essence, the lender gives the borrower a lower interest rate in exchange for an ownership share in the mortgaged property.


ERO, or electronic return originator, is an IRS-authorized entity that performs e-filing of federal tax returns. Most commonly, these are professional tax preparers.


Escheat is the assumption of property ownership by the government, where the deceased left no will, and there are no known heirs.

Escrow company

An escrow company is a neutral intermediary in a property transaction that holds funds and documents. Once the conditions of the sale are fulfilled, the escrow company transfers the withheld items to the appropriate parties to complete the transaction.

Escrow payment

Escrow payment is the money withheld from a mortgage payment (by the loan servicer) to cover property taxes, insurance, and related fees as they become due.

Estate freeze

An estate freeze is a means of fixing the value of assets for tax purposes, so that future appreciation of the assets will not incur estate taxes when they're transferred to beneficiaries. There are various techniques used to accomplish this goal, and all of them are relatively sophisticated. Estate freeze strategies are implemented by individuals who have sizeable estates.

Estate planning

Estate planning describes the cumulative actions taken to manage the transfer of property to heirs upon one's death. An attorney often advises and implements estate planning actions, which can include: writing a will, taking proactive action to reduce estate tax liability, naming an executor of the estate, designating life insurance beneficiaries, etc.

Estimated financial contribution - EFC

Estimated financial contribution, or EFC, is an approximation of the portion of college education expenses that will not be covered by financial aid. The EFC helps the student, or student's family, budget for their part of the educational expenses.

Estimated tax payments

Estimated tax payments are quarterly tax installments paid to the IRS during the year the income taxes are incurred. Taxpayers who don't have sufficient paycheck withholdings are often required to make estimated tax payments. Examples include self-employed individuals, and those who earn a large amount of investment income.


Eurocredit is a loan made in a currency other than the lender's national currency. In the U.S., loans made in euros, yen, or pounds (or any currency other than dollars), are eurocredits.


An evaluator is one who's qualified to make appraisals. Often, evaluators deal with unique items, such as rare coins or antique furniture.

Evergreen loan

An evergreen loan is a short term debt, usually a line of credit, that's constantly renewed. The principal essentially remains outstanding for the long term, even though the loan is structured with a short term maturity date.

Exact interest

Exact interest is the method of calculating interest expense that's based on a 365-day year. Some debts accrue interest for 360 days each year, while others accrue 365 days of interest annually. The method used for a given debt might be a point of negotiation between lender and borrower prior to funding, because it affects the actual annual interest costs of the loan. The loan documentation for a given debt would specify which method is to be used.


Exchange, in general, refers to a trade or sale of property. In investing, an exchange is a marketplace that facilitates the trading of financial instruments, such as stocks.

Exchange fee

An exchange fee, in general, can be any assessment that results from a trade. In mutual fund investing, the mutual fund company may charge its investors an exchange fee when shares of one fund are exchanged for shares of another fund. In time share ownership, an owner might be charged an exchange fee when trading in time at the owned property for time at another property.

Excise taxes

Excise taxes are government-imposed tariffs on the sale or use of non-essential goods. Tobacco and liquor often carry excise taxes. Excise taxes can also be imposed on someone who makes ineligible withdrawals from a retirement account.

Exclusion (tax)

Exclusion is a U.S. tax term referring to income that's specifically not included in the calculation of adjusted gross income.


An executor is one who settles a decedent's estate by accounting for all assets, providing for payment of liabilities, and ensuring that the decedent's wishes are carried out. Executors can be appointed by the estate owner before death or appointed by the court.

Exempt from withholding

Exempt from withholding describes taxpayers who, upon meeting certain requirements, don't need income taxes held back from their paychecks.


Exemption is an allowed reduction of taxable income, which results in a lower tax liability. Exemptions are available for various circumstances; an example is the tax break allowed for those who have dependent children living with them.


Eximbank is a federal agency that offers various financial services to domestic exporters. In the U.S., the complete name of the agency is Export-Import Bank of the United States. The U.S. Export-Import Bank provides financing and insurance services, specifically to small business exporters.

Existing home sales

Existing home sales is a report issued monthly by the U.S. National Association of Realtors containing home sales data for one month, including the number of transactions and the sale prices. The report only includes transactions related to existing residences, and doesn't include new construction or the sale of newly built homes.

Exordium clause

Exordium clause is the introductory section of a will. Exordium clauses usually contain information pertaining to the identity of the person who wrote the will, and general legal verbiage that defines the document as a valid will.

Exp ratio

Exp ratio, or expense ratio, pertaining to mutual funds, is the quotient of expenses divided by net assets. The resulting percentage is indicative of the cost to operate the fund each year. A higher expense ratio indicates a lower yield, because assets that are used to cover expenses are not invested, and are therefore not producing value and income gains.


Expensing is the practice of running business costs through the income statement rather than capitalizing them on the balance sheet. Tax legislation determines whether the costs to run a business are expensed or capitalized. Generally, costs associated with the purchase of items that have more than one year of useful life are capitalized, although exceptions to this rule are available for small businesses.

Explicit interest

Explicit interest is the actual interest cost of a loan, expressed in dollars.

Export-Import Bank

Export-Import Bank, or Eximbank, is a federal agency that offers various financial services to domestic exporters. In the U.S., the complete name of the agency is Export-Import Bank of the United States. The U.S. Export-Import Bank provides financing and insurance services, specifically to small business exporters.

Express account

An express account is a deposit account with check-writing capabilities that offers customers reduced monthly fees in return for limited access to bank tellers. Express account customers can usually use the ATM, telephone banking, or online banking services free of charge, but they are charged to use bank tellers.

Extended IRA

An extended IRA is a tax-advantaged retirement account that can be passed on to two generations of beneficiaries. If an original IRA accountholder dies while there are still assets in the account, those assets are passed on to the designated beneficiary, who's called the first-generation beneficiary. With an extended IRA, the first-generation beneficiary can distribute the assets until his death, and pass what's left to someone else, called the second-generation beneficiary.

Extended warranty

An extended warranty is a purchased arrangement that pays for replacing or fixing an item if it breaks after the dealer's warranty expires. Extended warranties are like insurance policies, where specific coverages can vary widely among providers. Extended warranties are sold for things like cars, consumer electronics, and appliances; they can be purchased from the manufacturer or from a third party.

Energy Efficient Mortgage

A "green" or "energy efficient" mortgage is a type of mortgage—that is ultimately rolled into your primary mortgage—that allows you to borrow funds earmarked specifically for energy efficient upgrades to your current home or to a home that you plan to purchase.