If loans and investments are new to you — or if you just want to confirm your understanding of financial terminology — this glossary can help. If you’re looking for a term not listed below, just drop us an email and we’ll consider adding it to the list.

Annual Percentage Yield (APY)
An investment term that reflects the higher effective rate of return that is earn when investment interest is re-invested rather than being paid out.

The reduction of the outstanding loan principal as payments are made over a specified number of years. Each loan payment comprises both the interest due during that payment period (usually one month) and a small amount of the principal.

Basis Point
One-hundredth of a percentage point: one percentage point = 100 basis points

The amount of principal due at the end of the loan term. Payments made on a five-year Fixed Rate loan are primarily credited to interest, so when the loan comes dues at the end of five years, the balance of the principal that is due is the balloon. Upon request, the Cornerstone Fund will generally re-finance balloons at the prevailing interest rate.

The maximum amount that the interest rate can rise in a given time period on ad adjustable rate loan. Cornerstone Fund loans have two caps (generally expressed as, for example, 2%/6%) —

Adjustment Period Cap
The maximum rate increase per adjustment period based on the loan typeLife of Loan Cap
The maximum rate increase over the life of the loan

Demand Note
Like a money market account, a Cornerstone Fund Demand Note is an investment that pays a market rate of interest in funds that may be withdrawn by the investor at any time.

Adjustable rate loans are tied to an average (or index), over a particular period of time, of the rates paid either by the US Treasury or by major banks borrowing from the financial markets (ex: LIBOR — the London Interbank Offering Rate).

Interest Rate Rebate
A program the gives borrowers an opportunity to reduce the effective interest rate on a Fixed Rate loan by up to 1%. For more information, click here.

LIBOR is the London Interbank Offered Rate (pronounced LIE-bore), the most widely used benchmark for short term interest rates. Roughly equivalent to the US Federal Funds rate, LIBOR is set by the market rather than by a government entity.

The number of percentage points added to the index to calculate the rate on an adjustable rate loan. For example, the rate on a 3-year adjustable loan is calculated by adding 3.50% (the margin) to 1-Year Treasury (the index).

Term Note
A Term Note is a Cornerstone Fund investment that pays a stated interest rate on funds invested for a specified period of time. Cornerstone Fund Term Notes are not FDIC insured.