Second mortgage

A mortgage made subsequent to the previous one or subordinate to the first one. The lenders of the second mortgage gets paid after the first mortgage is paid. See further First mortgage

Secondary mortgage market

Buying and selling of mortgages to collect more funds and grant new loans. It gives more liquidity to lenders.

Secured loan

A loan covered by a security, guarantee or collateral

Seller carry-back

An agreement in which the finance is provided by the property owner along with an assumed mortgage.


Servicing loans include collecting monthly payments, keeping records of loan progress, assuring payments of taxes and insurance etc.

Subordinate financing

Subsequent mortgage to the first one on the property when a new loan is taken out.


A drawing of a property by a lead surveyor showing precise measurements, boundary encroachments and other physical properties.

Sweat equity

It is a process where the future homeowner actually contributes to the construction of his home and thus accrues equity on his home.

Sale leaseback

When the seller transfers the deed to the buyer, then rents the property from the new owner.

Sales agreement

An agreement which is also known as the "purchase agreement" or "agreement of sale", is the contract signed by buyer and seller stating the terms under which the property will be sold.

Sallie Mae

The largest originator of student loans.

Satisfaction of a mortgage

A document provided by the lender as evidence that the loan has been paid off. Usually, it is up to the borrower to remove the lien from the public record.

Savings and Loan Association

A state or federally-chartered financial institution that was a primary a provider of home mortgages by using depositor's savings as financial backing.

Schematic designs

The structural plans for a building's mechanical, plumbing, and electrical systems.


Property which is designed and used as collateral.

Security deposit

An amount, often one month's payment, the dealer holds to be sure that the car will be returned in good condition.

Self employed borrower

When a person is self employed, they may be looking for a type of mortgage that will let them be flexible in the amount of the payments from month to month. Many mortgage companies will work with someone in this situation to find a mutually agreeable mortgage situation.

Self-employed person

Someone who does not work for anyone else and who is running their own business, or trade and is the sole proprietor.

Seller broker

One who earns a commission from the seller of a property in exchange for finding a buyer and assisting in the negotiations.

Seller's agent

An agent who works for a real estate firm and is loyal to the seller.

Seller's market

When the number of interested buyers is greater than the number of sellers which make the prices increase.

Semi-custom home

A house in which the buyer cannot alter the layout, but can specify certain amenities.

Serious delinquency

When a single-family mortgage that is 90 days or more past due, or a multifamily mortgage that is two months past due.

Service contract

A contract that covers certain car repairs or problems after the manufacturer's or dealer's warranty expires. These warranties are sold by car manufacturers, dealers and independent companies.


An organization or company that collects monthly mortgage principal and interest payments from homeowners and manages escrow accounts. This company will also handle the collection of funds and the payment for your property taxes when they are due.

Settlement cost (HUD guide)

A book given to consumers after completing a loan application that provides an overview of the lending process.

Settlement statement

A document detailing who has paid what to whom.

Shared-appreciation mortgage

A home loan in which the lender offers a very low interest rate in exchange for a share in the home's profit upon its sale.

Shared equity partnership

An arrangement where one buyer lives in a home and the other has money invested in the property as an investment. The partners split the capital gain after the property is sold.

Simple interest

Interest computed only on the principal balance, without compounding.

Simple interest loan

The interest accruing on the unpaid principal amount, excluding the compounding interest of total amount due.

Single agency

When the agent or broker represents and owes his or her fiduciary to only one party in a real-estate transaction.

Skip payment mortgage

A feature in some mortgages where the borrower can choose not to make the payment in a given month. The borrower would not be considered late or delinquent, but would incur higher interest charges as a result.

Social security number

The eight digit number every US citizen is given at their birth. It is possible for a non-citizen who is a permanent resident to obtain a number. This number is used for identification, applying for loans, and for disbursement of social security monies upon retirement. It is recommended the one memorizes this number and is cautious when making it available to prevent identity theft.

Soft inquiry

A designation a person's credit report that indicates that someone has asked for a copy of his or her report. They are not included in the formula for determining a person's credit score.

Spec home

A house built before a buyer has been found, but with the assumption that one will be found.

Special forbearance

A situation where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments in order to prevent a loss or foreclosure.

Standard Payment Calculation

The calculation which determines the amount needed to repay the loan in monthly installments. 

Starter home

A home that is relatively small and inexpensive and bought as a first home; often a fixer-upper.


An illegal process in which a prospective buyer is shown properties only in specific neighborhoods where the residents share the buyer's ethnicity.

Step-rate mortgage

A mortgage with smaller payments at the beginning and then gradually increasing the payment amount after the first two years.

Stockholder's equity

A sum of proceeds from the issuance of stock and retained earnings less amounts paid to repurchase common shares.

Student loan

Loans given to a potential student upon entering college or university to help pay for tuition and related expenses. Student loans carry lower interest charges than is typically available to consumers.


A commissioned real estate agent who finds a buyer for a property, but is not the property's listing agent.


A person or company that does specialty work for a general contractor.

Subject property

The home that you intend to obtain the mortgage on.

Subordinate loan

Mortgage whose priority is below that of another mortgage, like a second or third mortgage or a home-equity loan

Sub prime borrower

A borrower who has been late on a mortgage payment or has a less-than-perfect credit report.

Sub prime mortgage

A mortgage granted to a borrower considered sub prime, or has a low credit score due to a late payments or a default.

Supplemental Educational Opportunity Grant (SEOG)

Paid for by a combination of government and college funds, these awards are given to undergraduates and can be up to $4000. Pell grant recipients receive highest priority for the grants.


Exact measurements of a parcel's dimensions, relation to landmarks and location and dimensions of improvements. The survey will allow you to view from above, your lot lines and encroachments between you and your neighboring lots.

S&P no-load index fund

An S&P no-load index fund is a fee-free mutual fund that invests in the stocks that comprise the S&P 500 stock market index. The S&P 500 contains primarily large-cap, American corporations.


S&L stands for savings and loan association. This is a financial institution that accepts deposits and uses them to originate mortgage loans.

S&P 500 Mini

S&P 500 Mini is an investment that represents a designated percentage of an S&P derivative contract. S&P 500 futures and options contracts are exchange-traded and cash-settled; the Minis have these same characteristics, but trade at much lower prices. These lower prices make Minis available to individual investors, who use them for hedging purposes.

S&P/Case-Shiller Home Price Indexes

S&P/Case-Shiller Home Price Indexes track the volatility in U.S. home prices by collecting data on single-family properties that have been sold more than once in regular market transactions. There's a national index and indexes for many metropolitan statistical areas (MSAs).

Safe harbor

Safe harbor is a concept referenced in SEC legislation that protects a public company's management team from liability for providing financial outlooks that later turn out to be inaccurate. To receive such protection, the management team must provide financial forecasts that reflect what management knows at the time the forecasts are published.


Safekeeping is the holding or guarding of an asset in an area where it cannot be damaged or stolen. Some financial institutions provide safekeeping as a service to their customers.

Salary reduction contribution

Salary reduction contribution is an option on employee-sponsored retirement and savings plans, where the employee elects to direct a portion of her pre-tax earnings into the plan. The salary reduction contribution is also called elective deferral contribution.

Sale and leaseback

Salary reduction contribution is an option on employee-sponsored retirement and savings plans, where the employee elects to direct a portion of her pre-tax earnings into the plan. The salary reduction contribution is also called elective deferral contribution.

Sale contract

A sale contract is a legal document specifying the terms of a property title transfer. The property can be real estate, or some other tangible asset. The contract would describe the asset, specify the selling price, and list any contingencies.

Sales and purchase agreement - SPA

A sales and purchase agreement, or SPA, is a legal document that binds a buyer and seller to fulfill their respective parts of a sale transaction. SPAs are used with real estate and with large business transactions.

Same property rule

Same property rule is a tax regulation pertaining to the use of IRA funds. When non-qualified withdrawals are made from an IRA, the funds must be rolled back into an IRA in the same form as they were withdrawn to avoid penalties. In other words, if an individual withdraws cash from one IRA, he must roll that money into a new IRA as cash and not as securities.

Sample sale

A sample sale is a strategy to move excess merchandise. The strategy is popular with high-end clothing designers that have sample product on hand; the samples were probably used originally to sell clothing orders to retail distributors. Usually, the sample merchandise is in good shape, such that sample sales are great finds for bargain shoppers.

Sandwich lease

A sandwich lease is a property use arrangement between a lessee and property owner, where the lessee subleases the property to a third party.


A SARSEP IRA is an outdated form of IRA that was offered by small companies for the benefit of their employees. Employees made pretax contributions to the SARSEP IRA through paycheck deductions. SARSEPS were replaced by SIMPLE IRAs in the 1990s.

Satisfaction of debt

Satisfaction of debt is the fulfillment of an obligation to repay borrowed money.


Savings is the amount of one's income that remains after expenses are deducted.

Savings account

Savings account is a bank or credit union deposit that earns interest and can be withdrawn on demand.

Savings bank

Savings bank is a financial institution that accepts consumer deposits and pays interest on those deposits.

Savings incentive match plan for employees

Savings incentive match plan for employees is a type of tax-advantaged retirement plan offered by employers that have fewer than 100 employees. More commonly known by the acronym SIMPLE, these plans are available as IRAs or 401(k)s.

Schedule A

Schedule A is an income tax form used by U.S. taxpayers who itemize their deductions. Taxpayers are allowed the option of taking a standard deduction, or calculating their deductions by itemizing certain expenses. Only those taxpayers who itemize their deductions need to complete Schedule A.

Schedule D

Schedule D is an income tax form used by U.S. taxpayers who incur realized, taxable capital gains or losses during the tax year.

Scheduled recast

A scheduled recast is a planned restructure of a mortgage loan's payment structure. An interest-only mortgage, for example, may have a scheduled recast. This would be the date the mortgage converts from interest-only to fully amortizing. On that date, the outstanding debt balance is used to calculate the payment amount required so that the mortgage will be fully paid off at maturity.


Schedules, in general, are forms intended for information reporting. The term is also used in reference to certain IRS tax forms.

Schumer Box

Schumer Box is an information table that's included with credit card solicitations; the box specifies the card's interest rates and important terms. The rate must be listed in 18-point type or larger, while the other terms must be at least 12-point type. Senator Chuck Schumer authored the legislation that requires card issuers to provide this information.

Second chance loan

A second chance loan is a debt offered to a borrower who has prior credit problems. Generally, this type of loan is characterized by restrictive terms and a high interest rate. The borrower generally stays with the second chance loan just long enough to rebuild her credit history, then refinances to a more affordable debt as soon as she qualifies.

Secondary CD

Secondary CD is a time deposit issued by a brokerage that can be bought or sold prior to maturity. Secondary CDs are theoretically more liquid than bank CDs (which must be held until maturity), but there's no guarantee that the investor will be able to sell the CD for his full investment plus interest.

Second-chance auction scam

Second-chance auction scam is the practice of offering non-winning bidders the opportunity to purchase the item through unauthorized forms of payment, after the close of an online auction. Sometimes, this scam is used to obtain the bidder's bank account information fraudulently.


Seconds is the term used for merchandise that's badly damaged or flawed. Seconds are usually sold at huge discounts off the standard prices.

Second-to-die insurance

Second-to-die insurance is a policy that's written to two people, and pays benefits when the last surviving person dies. Usually, this type of insurance is used by married couples for the purpose of paying estate taxes or supporting surviving children.

Section 1031

Section 1031 is the part of U.S. tax law that defines a method for investors to defer capital gains taxes. Such deferral is allowed when the appreciated property is exchanged for a "like-kind" property that's to be used for business or investment purposes. An investor, for example, may sell one rental property and buy another with no tax effect. If the second property is sold with no corresponding reinvestment, taxes would then be assessed. The gain is calculated from the cost basis of the original investment.

Section 1035 exchange

Section 1035 exchange is the name for a tax-free trade of one annuity contract for another, as defined by Section 1035 of the U.S. tax code. Such a trade must involve the same policyholder on both contracts and contracts that are equivalent in value.

Section 1245

Section is 1245 is the part of the U.S. Tax Code that explains how the sale of depreciable property may qualify as a taxable capital gain rather than taxable income.

Section 1250

Section 1250 is the part of the U.S. Tax Code that mandates the treatment of gains earned from the sale of real estate that has been depreciated on an accelerated basis. Any gain in excess of what would have been earned had the property been depreciated on a straight line basis, is taxed as regular income.

Section 179 expense

Section 179 expense is the name for a fixed asset purchase that's expensed through the income statement immediately, rather than being capitalized on the balance sheet and depreciated over time. This treatment is allowed under Section 179 of the U.S. Tax Code.

Secure option ARM

Secure option ARM is a real estate mortgage loan that's characterized by payment options and an initial fixed-rate period followed by an adjustable-rate period. For a specified period of time, the borrower has the option to make one of generally three payment amounts. Making the lowest amount results in negative amortization; making the middle amount pays only the monthly interest; and making the largest amount reduces the principal balance. Because the mortgage carries a fixed-rate initially, these payment levels remain stable unless the negative amortization limit is reached. At some point, the fixed-rate period will end, and the loan will convert to an adjustable rate.

Secured card

Secured card is a credit card that's tied to a cash deposit. The cash deposit serves as collateral; the card issuer can dip into that deposit if required minimum payments on the account are not made. Secured credit cards are used by individuals who don't qualify for a traditional credit card because they have poor or no credit.

Secured credit card

Secured credit card is a credit card that's tied to a cash deposit. The cash deposit serves as collateral; the card issuer can dip into that deposit if required minimum payments on the account are not made. Secured credit cards are used by individuals who don't qualify for a traditional credit card because they have poor or no credit.

Secured debt

Secured debt is a loan that's supported by collateral. Mortgages are secured, because the lender takes a lien on the property, and has the right to foreclose in a default situation. Auto loans are also secured, because the lender takes a lien on the vehicle.

Securities lending

Securities lending is the practice of loaning securities positions. A broker might wish to borrow securities (rather than buy them) to cover a short position without impacting the stock value. These loans are usually supported by cash collateral.

Security freeze

Security freeze, also called a credit freeze, is the temporary blocking of an individual's or business's debt payment history as maintained by a credit agency. The freeze blocks all access to the specified credit report and score, in order to prohibit the opening of new credit accounts under that identity.

Security interest

Security interest is a lender's/creditor's ownership stake in a property that's taken in support of a debt obligation.

Security loan

Security loan is a debt that's supported by collateral. The lender receives an ownership stake in the collateral that allows for seizure of the property if the borrower defaults.

Self-amortizing loan

A self-amortizing loan is structured so that the sum of all the payments equals the total interest and amount borrowed. If all payments are made as scheduled, the debt balance will be zero at maturity. Traditional mortgages are self-amortizing, for example. Adjustable-rate loans can also be self-amortizing, but the payment amount will change with any changes to the interest rate.

Self-amortizing mortgage

A self-amortizing mortgage is a real estate property loan that's paid off at maturity, as long as all payments are made as scheduled. Normally this would be a fixed-rate mortgage, but adjustable-rate mortgages can be self-amortizing also. In a fixed-rate structure, the payment amount would be fixed; an adjustable-rate mortgage would have a fluctuating payment amount.

Self-directed IRA

Self-directed IRA is a tax-advantaged retirement savings program that puts the responsibility for investment decisions on the account owner. A self-directed IRA allows the account owner to invest in other asset classes (such as real estate) besides securities. The IRS requires a trustee or custodian to hold the assets.

Self-employment tax

Self-employment tax is the Social Security and Medicare contribution that's required from self-employed taxpayers. These contributions are normally withheld from the taxpayer's paycheck; self-employed taxpayers don't receive a paycheck, so they're assessed these taxes separately.

Seller financing

Seller financing is a type of real estate financing that involves a loan made by the seller to the buyer. This arrangement might be made if the buyer doesn't qualify for a traditional bank loan in the full amount of the purchase. The seller earns interest on the debt, and takes a security position in the property, just as a bank lender would. Seller financing is also called seller take-back.

Seller take-back

Seller take-back is a type of real estate financing that involves a loan made by the seller to the buyer. This arrangement might be made if the buyer doesn't qualify for a traditional bank loan in the full amount of the purchase. The seller earns interest on the debt, and takes a security position in the property, just as a bank lender would. Seller take-back is also called seller financing.

Seminole quarterbacking

Seminole quarterbacking is a slang term that means choking under pressure, or failing when the stakes are highest.


Senior, in reference to debt, describes an obligation that has a higher priority claim on secured assets. If the assets have to be liquidated, the senior creditor is paid before junior creditors can be paid. In mortgages, the first mortgage is senior to the second mortgage.

Senior debt

Senior debt is a loan that has repayment priority over another loan. If the borrower's assets have to be sold off to repay creditors, the creditor holding the senior debt obligation will be paid back first. In mortgages, a first mortgage is a senior debt, and the second mortgage is a junior debt.

Senior security

Senior security is an issued debt (such as a bond or debenture) that has a priority over other securities. If the security issuer's assets must be liquidated, the holders of the senior security would be repaid before holders of junior securities.


SEP is the abbreviation for Simplified Employee Pension Plan. SEP is a type of IRA that's established by the employer on behalf of the employees. The employer can make tax-deductible contributions to employee SEPs up to a specified limit.


SEP IRA is a type of tax-advantaged retirement savings plan. The SEP is established by an employer on behalf of the employees. The employer can make tax-deductible contributions to employee SEPs up to a specified limit.

Separate return

Separate return is a tax return filed by a married taxpayer who does not file jointly with his spouse. Married taxpayers can choose to file one joint return or two separate returns. Generally, it's beneficial to file jointly, but in some situations, it's advantageous to file separately.

Series HH bond

A Series HH bond is U.S. Treasury income security. The U.S. Treasury no longer issues Series HH bonds, although they're still held by investors and earning income. The bonds pay interest twice a year for 10 years from the issue date; thereafter, the rate us set by the Treasury.

Service charge

Service charge is a generic term for a fee charged to a customer. Service charges are usually associated with a violation of account terms, such as allowing an account balance to drop below a specified minimum.

Servicing strip

Servicing strip is a security that's backed by mortgage servicing fees. Theoretically, mortgage servicing fees are a long-term stream of cash flows. As such, the securities backed by these fees trade on the secondary market, similar to the way in which mortgage-backed securities trade.


Settle is to resolve. In financing, to settle is to pay off a loan obligation. In legal matters, to settle is to come to an agreement on a dispute. In investing, to settle is to finalize the processing of purchase transaction transfers.

Settlement sheet

Settlement sheet is a statement that lists the distribution of funds associated with the closing of a real estate transaction. Items on the settlement sheet might include loan fees, property tax prepayments, insurance premiums, etc.

Severance pay

Severance pay is compensation provided by an employer to an employee upon termination of that person's employment.

Share appreciation mortgage

Share appreciation mortgage is a type of real estate property loan where the homeowner/borrower exchanges a portion of the property's future value increases for a lower interest rate. Say, for example, that the agreement provides the lender 25 percent of the property's appreciation over a period of 10 years. If the property value increases $100,000 in that time, the lender would be due $25,000. Usually, the lender receives its portion of the appreciation when the home is sold. If the borrower doesn't sell the home, he must pay the lender its portion in cash.

Share certificate

A share certificate is a time deposit product issued by credit unions. Similar to a certificate of deposit (CD), the share certificate earns a fixed payment if it's held for the designated time period.

Short hedge

Short hedge is the process of selling a derivative that isn't owned (i.e., selling short), where the derivative hedges against an investment that is owned. In other words, a short hedge strategy is pursued to reduce risk associated with an investment that has already been purchased.

Short refinance

Short refinance is the replacement of a mortgage, usually with a smaller mortgage, when the borrower is already in default. This is done to transition the borrower to a more affordable payment structure. The lender has to write off the difference between the old mortgage and the new mortgage, but this may be preferable to foreclosure.

Short sale

A short sale is an investing strategy that involves the sale of securities that are borrowed and not owned. The seller agrees to the transaction with the expectation that the security will go down in price; when the decline occurs, the seller can purchase the security on the open market at a lower price than the amount generated by the short sale.

Short tax year

Short tax year is the term for a tax period that's less than on year. This only pertains to businesses, and can result from the midyear inception of a business or a change in the business's fiscal year-end date.


Short-term describes something that has a brief duration. In accounting, short-term usually means 12 months or less. Short-term debt, for example, is an obligation that's due and payable within one year.

Short-term bond fund

Short-term bond fund is a mutual fund that invests in debt securities that mature in five years or less.

Short-term capital gain or loss

Short-term capital gain or loss is the amount earned or lost on an asset that was sold after being held for less than 12 months. Short-term capital gains have a less favorable tax impact than long-term capital gains (which result from the sale of assets held longer than 12 months).

Sight letter of credit

Sight letter of credit, or sight L/C, is a document used in international trade that's payable to the holder if presented with certain supporting documentation. Sight L/Cs are different from traditional L/Cs in that the traditional L/C guarantees payment, but is not immediately payable.

Signature loan

Signature loan is another name for an unsecured personal loan. This type of loan is made on the strength of the borrower's credit rating and history, and no collateral is pledged. Banks may offer signature loans to their wealthy, long-standing customers.

Silent second mortgage

A silent second mortgage is a secondary real estate loan that's not disclosed to the primary lender. Since both a first and second mortgage lender take a security interest in the home, each lender should be notified of the other lender's existence. Not doing so is usually fraud, particularly if the second mortgage is used to fund the down payment that the first mortgage lender requires.


SIMPLE is an acronym for Savings Incentive Match Plan for Employees, which is a type of retirement plan established by employers with a relatively small number of employees. SIMPLE plans can either be IRAs or 401(k)s. Employers can make tax-deductible contributions to employees' accounts, either as a matching contribution, or a flat non-elective contribution.

Simple interest bi-weekly mortgage

A simple interest bi-weekly mortgage is a real estate loan that's structured with a payment due every two weeks. These payments are applied to the principal balance as soon as they're received. Because the payments are applied immediately, rather than being held and applied once monthly, the borrower realizes reduced interest costs over time.


A SIMPLE IRA is a tax-advantaged retirement savings plan established by an employer for the benefit of employees. SIMPLE IRAs can be set up by employers that have 100 or fewer employees, and tax-deductible contributions can be made by employees and the employer.

Simple-interest mortgage

A simple-interest mortgage is a real estate property loan that accrues interest daily rather than monthly. The daily interest rate is calculated by dividing the stated interest rate by 365 days; the resulting percentage is then applied to the outstanding balance. A simple-interest mortgage will result in higher total interest costs relative to a traditional mortgage. This is because traditional mortgages accrue interest based on 12, 30-day months, which equates to 360 versus 365 days.

Simplified employee pension plan

Simplified employee pension plan is a tax-advantaged retirement savings plan commonly used by small businesses and self-employed individuals. Referred to as the SEP IRA, this program has features similar to a traditional IRA. For example, contributions made are tax-deductible and earnings in the account are tax-deferred.


Single is a tax filing status used by unmarried individuals who don't meet the requirements for any other filing status.

Single-payment loan

A single-payment loan features no periodic principal payments. Instead, the entire amount borrowed is due at maturity.

Sinking fund/reserves

Sinking fund/reserves is an account where a debt issuer makes periodic deposits that will eventually be used to settle a large, long-term debt. A bond issuer, for example, might use a sinking fund to ease the repayment burden at bond maturity. The existence of the sinking fund is attractive to investors, because it lowers the risk associated with the security.


Skimming is a fraudulent practice of using a small device to scan the magnetic strip on a credit card, and record its information. Skimming is also a new product pricing strategy that involves setting a high price to attract a luxury-oriented customer. As the product matures in the marketplace, the price is usually lowered gradually to increase sales volume.


SLMA stands for Student Loan Marketing Association. This entity is now known as Sallie Mae, and is the leading provider of student loans in the U.S.

Smart cards

Smart cards is a generic term referring to plastic, wallet-sized cards that hold data via a magnetic strip on the back. Smart cards can be designed to function as credit cards, identification cards, access cards, etc.


SMI is supplemental medical insurance, also known as Medicare Part B. SMI is voluntary coverage that pays for certain medically necessary or prescribed, preventative benefits; the insured must pay a monthly premium.


Smishing is similar to phishing, only the practice uses SMS messages sent to cell phones rather than emails. The scam involves SMS messages that direct recipients to a website that either collects personal information (such as credit card numbers), or installs malware on the recipients' phones.


Snowball is a debt pay-off technique involving pay-down of the highest-rate debt first. The borrower makes minimum payments on all accounts, except for the one with the highest rate. To the highest-rate account, the borrower pays as much as he can afford. Once this account is paid off, the borrower focuses on the highest-rate account of those remaining. This process is repeated until all accounts are paid down.

Soft loan

Soft loan is a debt that carries a below-market interest rate. Soft loans are only made under special circumstances, such as between family members, or by an established government for the purposes of funding a developing country.

Special assessment

A special assessment is a tax charged to a property and paid by the property owner. Proceeds from the tax are used to pay for specific public improvements that benefit the assessed property. An example of such a benefit might be the replacement of a curb or sidewalk in front of the assessed property.

Special finance

Special finance is the segment of the auto loan industry that serves poor-credit or no-credit borrowers. A special finance loan will be more expensive than a loan to a better qualified borrower, because the risk of default is higher.

Special purchase

Special purchase describes retail goods that were purchased in bulk by the retailer from the manufacturer. The retailer receives a discount from the manufacturer for the size of the order, and passes part of that discount to consumers via lower prices.

Specific-shares method

Specific-shares method is a technique for calculating taxable capital gains on securities trades, for the purposes of minimizing taxable capital gains. Using this method, an investor would designate which shares he'd like to sell among the various identical shares held. For example, say an investor bought 50 shares of Acme Company for $55 each, and later bought 25 shares for $60 each. When the investor is ready to sell 10 shares, he can ask his broker to sell the $60 shares, because they have a higher cost basis. The resulting sale would minimize the investor's capital gain and tax effect.

Speculation home or spec home or built on spec

Speculation home, spec home, and built on spec all refer to a home that is built before a buyer is secured. The developer makes the investment to build the home on the belief that a buyer will be found.

Spending phase

Spending phase refers to the time in one's life after retirement when household cash flow comes from retirement savings, government subsidies, or investment income, rather than wages and salary. Spending may exceed income, because the individual might be traveling, following new interests, or otherwise enjoying his free time.


Spim is the term for unwanted text messages; spim is the text equivalent of spam.


Spit is the term for unwanted messages sent via VoIP, or Internet telephony. Spit is the Internet phone equivalent of spam.


Spoofing is a stock market scam that temporarily and erroneously inflates a stock's price. A trader will place a large and anonymous order for a certain stock through an electronic communication network, and then cancel the order just a moment later. The initial trade order causes the stock price to spike, which attracts buyers to that position. As buyers move to purchase the stock, the share price rises. The original trader can then sell his position at an inflated price.

Spousal contributions

Spousal contributions are monies deposited to a spousal IRA. If a single income married couple files a joint tax return, the non-working spouse may be qualified to make tax-deductible contributions to a Spousal IRA. Generally, an individual with no taxable income doesn't qualify for tax-deductible IRA contributions.

Square footage

Square footage is the floor area of a building or room, calculated by multiplying the length in feet by the width in feet.

Standard card

Standard card is a basic credit card that has no perks or added features. The standard card is differentiated from a gold or platinum card.

Standard deduction

Standard deduction is a fixed tax deduction amount, usually based on filing status, that can be taken by individuals who do not itemize. The standard deduction represents a base level of income that doesn't get taxed.

Standard mileage rate

Standard mileage rate is an IRS-specified amount that can be used to calculate tax-deductible vehicle expenses. The mileage rate is used in lieu of tracking actual gas and car maintenance expenses.

Standby loan commitment

Standby loan commitment is an offer of credit made by a lender that expires on a specified date. The standby loan commitment is expressed in a written document that states the terms of the proposed debt, as well as the expiration date of the offer.

Start rate

Start rate is a term used for an adjustable-rate mortgage's opening interest rate.

State tax ID or registration number

State tax ID or registration number is a series of digits that functions as an identifier for a business, in the same way that a Social Security number would function for an individual. Businesses are usually required to obtain state tax ID numbers.

Stated income/stated asset mortgage - SISA

Stated income/stated asset mortgage, or SISA, is a type of mortgage loan that doesn't require verification of the borrower's income and assets during the qualification process. SISA mortgages are appropriate for self-employed individuals, for example, who have sufficient income to make the mortgage payment, but can't document that income. This type of loan falls within the Alt-A mortgage category, and is therefore priced higher than a prime mortgage would be.


A statement is a written record of transactions on an account, such as a checking account or credit card account, that occur within a specified period of time.

Statement savings

Statement savings is a traditional, liquid savings account on deposit with a bank or credit union. Statement savings accounts have low fees, but also pay very low interest rates.

Statutory employee

A statutory employee is any taxpayer who reports wage and earnings income on a Schedule C, but is deemed an employee by statute. Social Security and Medicare taxes for statutory employees are the responsibility of the employer. Hhme workers, for example, who fulfill their duties on employer-furnished equipment (such as a computer), may be deemed statutory employees. The statutory employee rule prevents employers from avoiding the responsibility of paying certain employee taxes.

Sticker price

Sticker price is the asking price on an automobile for sale at the dealer. The sticker price includes the manufacturer's suggested retail price, plus the cost of options and various dealer charges. By federal law, car dealerships are required to display the sticker price on the vehicle's window.

Sticky downward

Sticky downward describes a trend of falling real estate values, where the home prices decline more slowly than they rise during a hot real estate market. The term can be applied to other up and down trends, as well. Wages, for example, can rise quickly, but an employer would have a difficult time trying to lower them.

Stock power

Stock power is a power of attorney that allows one to transfer ownership of a security to another individual or entity. When a bank takes stock as loan collateral, the bank may require the borrower to provide the bank with stock power.

Stock savings plan

Stock savings plan is a program that gives Canadian taxpayers tax breaks for investing in securities that support the provincial economy.

Stock screener

Stock screener is an online database tool that allows investors to select a set of investment preferences, and then search for stocks that match them. Preferences can relate to P/E ratio, market cap, EPS growth, etc.

Store of value

Store of value is any asset or currency that holds value and can be exchanged for something else of value. In normal economic periods, currency is a store of value. When extreme economic cycles cause the public to distrust the value of a currency, consumers will begin trading with other stores of value, such as gold.

Straight life annuity

Straight life annuity is a retirement planning product available through insurance companies, which makes regular payments to the annuitant (the person covered by the annuity) until death. There's no beneficiary on this type of policy, so the payments cease at the annuitant's passing. This product may be appropriate for one who's primarily concerned with cash flow, but not for an individual who needs to provide for dependents.

Strategic asset allocation

Strategic asset allocation is an investing strategy that involves keeping certain percentages of capital invested in specific asset classes. Because each investment will perform differently over time, the investor must periodically review the allocation of invested capital, rebalancing the positions to the desired percentages of the total portfolio.

Strike price

Strike price is the specified price at which an option contract can be exercised. On a call option, the option holder can buy the security at the strike price; on a put option, the option holder can sell the security at the strike price. Strike price is also called exercise price, or grant price.


Stripper is a slang term referencing a homeowner who repeatedly cashes out home equity by refinancing. The term has the negative implication that the money raised through these refinances is spent frivolously rather than invested for future growth. Those who strip their equity in this fashion have a false sense of wealth.

Structured finance

Structured finance is the segment of the commercial lending industry that provides complex debt products and solutions that are tailored for specific situations.

Student loan interest deduction

Student loan interest deduction is a tax break available to U.S. taxpayers who paid interest on loans used for higher education during a given tax year.

Student Loan Marketing Association

Student Loan Marketing Association is the former name for Sallie Mae, a federally established entity that's now an independent, publicly traded corporation. Sallie Mae is the largest provider of student loans in the country.


Subindex is a set of securities that comprise one specialized group of securities, and are also part of a more general group. An example is the Dow Jones Agricultural Sub-Index (DJAIGAG).


A submortgage is a loan taken by a mortgage lender, where a customer's mortgage (which was made by the lender) is pledged as the collateral.


Subordinated describes a debt obligation that has a lower priority claim relative to senior creditors. The term can also describe the credit that's owed the lower priority debt. If a liquidation is required, the subordinated creditors are paid with any funds left after the senior creditors have been paid.

Subordinated debt

Subordinated debt is a debt obligation that has a lower priority claim relative to senior debt. If a liquidation is required, the creditors holding subordinated debt (also called subordinated creditors) are paid with any funds left after the senior creditors have been paid.

Subordination clause

A subordinated clause is language found in certain mortgage agreements and bond indentures that automatically gives the current debt a higher priority claim over any debt that may be issued thereafter.


Subprime describes borrowers or loans that are less-than-ideal. A subprime borrower, for example, usually has a low credit score. A subprime loan is a debt obligation that doesn't meet conservative underwriting standards, either because of the borrower's qualifications, or the structure of the debt itself.

Subprime borrower

Subprime borrower is a debtor who has a low credit score due to poor management of credit accounts in the past.

Subprime credit card

Subprime credit card is a revolving credit account provided to individuals who have low credit scores, such that they don't qualify for a conventional credit card. A subprime credit card will have a much higher interest rate than would be typical on a conventional credit card.

Subprime lender

A subprime lender is a financial institution that specializes in making loans to lesser-qualified borrowers. Subprime lenders charge more to make these loans, because there's a higher risk of default.

Subprime loan

A subprime loan is a debt obligation made to a lesser-qualified borrower. The subprime loan is typically characterized by a higher interest rate and more restrictive terms relative to a conventional loan of a similar type.

Subprime mortgage

Subprime mortgage is a real estate property loan made to a lesser-qualified borrower. A subprime mortgage carries a higher interest rate and more restrictive terms relative to a conventional (also called prime) mortgage. Borrowers of subprime mortgages generally have low credit scores and past documented credit issues.


To subrogate is to substitute one party for another with respect to a legal claim. When a collection agency takes responsibility for a debt on behalf of a client, for example, subrogation occurs.

Substandard health annuity

Substandard health annuity is a type of insurance contract that makes periodic payments to an individual whose lifespan is likely to be shortened by a pre-existing and documented health condition. Such an annuity would have a higher periodic payment amount because of the expected, shortened lifespan of the annuitant.

Subvented lease

Subvented lease is a discounted lease offered by an auto dealer via the manufacturer, usually for vehicle models that aren't selling well. The discount is achieved by lowering the rate of interest, or raising the vehicle's residual value.

Super sinker

Super sinker is a specialized bond that has a long-term yield and a short-term maturity. This type of bond might be backed by home mortgages; since a certain percentage of mortgages are paid off early, these prepayments can be used to repay principal to bondholders at maturity.


Superannuation is another term for a company pension plan. This is an employer-established retirement plan that can be funded by employer or employee contributions. Contributions may be tax-deductible, and earnings within the account may be tax-deferred.

Supplemental medical insurance

Supplemental medical insurance is an extra form of health insurance coverage that adds to an individual's primary coverage. Medicare Plan F, for example, is supplemental medical insurance.

Support test

Support test is one of five tests used to determine if you can claim another individual as a dependent on your tax return. To fulfill the support test, you must have funded more than half of the other person's living expenses during the tax year.


Surcharge is an extra assessment, tax, or amount owed.

Surrender charge

Surrender charge is an assessment imposed for cancelling a contract early. Insurance companies typically assess surrender charges when their customers cancel life insurance policies or annuity contracts prior to maturity. Surrender charge is also called surrender fee.

Surrender fee

Surrender fee is an assessment imposed for cancelling a contract early. Insurance companies typically assess surrender fees when their customers cancel life insurance policies or annuity contracts prior to maturity. Surrender fee is also called surrender charge.


Surtax is an extra assessment imposed on an individual or entity. Surtaxes are normally in the form of a tempory increase in income tax, which might be used to finance a major war or initiative.

Suspicious Activity Report - SAR

Suspicious Activity Report, or SAR, is a filing made by a financial institution when it suspects that an individual or entity is involved in money laundering activity or other related criminal violations of federal law. The SAR is filed with the Financial Crimes Enforcement Network (FinCEN).


A swap is an agreement between two parties to trade streams of cash flow generated by two different financial instruments. This would be done to reduce or offset exposure to one factor, such as fixed interest rates or adjustable interest rates. When a swap involves interest rates, the two parties agree to exchange cash flows related to specified rates and a specified principal amount, but they don't actually exchange the principal. Swaps can also involve two different currencies, where the parties are interested in reducing their exposure to certain foreign currency fluctuations.

Sweep account

Sweep account is a deposit account that automatically transfers all or some of the cash on deposit into another, high-yield account. Brokerages typically offer this service, where all cash not invested in securities is automatically transferred into a money market fund or similar instrument.

Swing loan

Swing loan is a short-term debt obligation that has a defined payoff source, such as a refinance to a long-term loan. Swing loans are also called bridge loans, or bridge financing.

Synthetic ID fraud

Synthetic ID fraud is a credit/identity scam that involves creation of new, fictional identities. The criminals will often combine made-up information with a real Social Security number to create the new identity.

Synthetic lease

Synthetic lease is an operating lease that's not recorded on the balance sheet as a liability, but is instead treated as an expense. The leased property is also not recorded on the balance sheet. Synthetic leases also allow the lessee to realize certain tax advantages that are normally associated with capitalized property or equipment, such as accelerated depreciation deductions included in the lease payments.

Systematic withdrawal plan - SWP

Systematic withdrawal plan, or SWP, is a mutual fund account feature that automatically withdraws funds from the account at regular intervals, and pays those funds out to the accountholder. An individual on a fixed income might benefit from SWP, as would someone who needs to meet mandatory retirement plan withdrawal requirements.

Systematic withdrawal schedule

Systematic withdrawal schedule is a means of taking money out of an annuity account; the annuitant makes withdrawals of specific amounts at regular intervals until the account value has been depleted. A systematic withdrawal schedule does not guarantee the annuitant lifetime payments.