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Frequently Asked Questions

Financial Glossary


Adjustable Rate Mortgage

A mortgage loan under which the interest rate is periodically adjusted to coincide more closely with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Also known as Adjustable Rate Loan, Adjustable Mortgage Loan (AML), Flexible Rate Loan, and Variable Rate Loan.

AG Foundation

Structured as a “pass-through” or “conduit” foundation, AG Foundation is set up so that people can give charitably through it, in order to achieve the giving goals of donors.

Allowances, Alternates, Not in Contract (NIC)

These are three items to avoid on your project. They are the greatest sources of change orders.

The contract documents (i.e. the drawings and specifications) should be complete to the point where all of the components that make up the project are clearly defined and specified, eliminating the need to classify certain items utilizing the above terms.

If the documents are not properly prepared by the architect, or they are unclear about certain items, they will direct the contractors to include allowances in their bids or will ask for alternate pricing. More often than not, you will find this to be the case on most projects.


The way a loan or other debt is paid off by equal periodic payments (usually monthly), which are calculated to pay off the debt at the end of a fixed period of time. The calculations include the accrued interest on the outstanding balance.


An estimate of market value placed on all real property and mobile homes. There are two kinds of appraisals: mass appraisal, in which a community is valued for tax purposes; and fee appraisal, in which one property is appraised, often in comparison with other properties. Each is accomplished under a different set of rules and guidelines.

Articles of Incorporation

The primary rules governing the management of a corporation in the United States. Sometimes referred to as the Certificate of Incorporation or the Corporate Charter, these rules are filed with a state or other regulatory agency.


Balloon Payment

The unpaid principal amount of a loan due on a specific date in the future, usually the amount that must be paid in a lump sum at the end of the term.

Bidding Process

There are several ways in which a project can be bid:

  1. Competitive general contractor bidding – In this process, the owner engages a licensed architect to produce a set of building plans and specifications for a project. The owner and architect will then select a list of pre-approved general contracting firms to bid on the project. The owner and architect will review the bids and most likely interview the bidders who submitted the most competitive bids in order to determine which firm will be awarded the project.
  2. Negotiated bid – In this process, the contractor or construction manager (CM) is engaged by the owner without going through a competitive bid process. The contractor or CM will then assemble the pricing for the project and, together with the owner and the architect, review the pricing. In most cases, the contractor or CM will be asked to value engineer certain aspects of the project in order to reduce the cost, resulting in a negotiated final price for the project.

Certificate of Good Standing

A certificate that indicates that the church corporate status with the state is current. Each year the church may be required to file a report with the state listing the names of their officers and board members. A copy of this report is all that is needed.

Charitable Gift Annuity

A contract wherein an individual or couple transfers cash or securities to the Assemblies of God Foundation in exchange for a promise to pay the donor(s) for the rest of their lives. Payments and rates are calculated based on the life expectancy of the donor(s). Charitable Gift Annuities are typically most beneficial to seniors who want stability in their income stream and want to support ministry.

Charitable Remainder Trust

An irrevocable trust designed to receive property, whether it be cash, securities, appreciated real estate, or other marketable assets, and then use that property (through sale or management of the property) to create an income payment that can continue through the life of the donor(s) and up to twenty (20) years to third parties, such as children. A Charitable Remainder Trust is an excellent alternative to an outright sale of appreciated securities, real estate or other marketable assets due to its charitable and capital gain tax benefits, but it can also be funded with cash to achieve a charitable tax deduction.

Closing Costs

Expenses, beyond the selling price, such as loan fees, title fees, etc. These expenses are paid when documents are executed and/or recorded and the sale is complete.


Property pledged as security to a debt. If the borrower fails to repay the loan, the lender may gain ownership of the collateral and sell it to recover the money.

Construction Manager (CM)

A contractor hired by the owner to manage a construction project and to represent the owner’s interests.

The CM can contract with the subcontractors and suppliers, or the owner can engage the subcontractors and suppliers directly. Either way, the CM has the responsibility to manage the overall project.

It is best to engage the services of a construction manager during the pre-construction phase of the project to work with the owner and the architect. The CM has valuable input regarding construction materials, means and methods of construction, value engineering, budgeting, phasing, scheduling, and bidding that will help lead to a successful project right from the start. The goal is to establish a budget, work through the design phase while keeping the design in line with the budget, and obtain competitive pricing that should be relatively close to the budget that was established.

Corporate Resolution

A written statement made by the board of directors detailing which officers are authorized to act on behalf of the corporation. The corporate resolution will be found in the board minutes, which detail decisions made by the board during the meeting. For example, a corporate resolution will be created if a board decides to borrow money. The resolution will detail the terms of the decision, along with the date of the board meeting.


Debt-to-Income Ratio

The ratio, expressed as a percentage, compares a borrower’s monthly payment obligation on long-term debts to his or her income.


A document that provides title to property and is filed with a county recorder.

Deferred Gift Annuity

A Deferred Gift Annuity is created when a gift of cash or an appreciated asset is given to charity in exchange for fixed payments to the donor for life, with payments commencing at a determined future date.

Design Build

There are several variations of design build:

  1. The owner can hire a design build firm that has a licensed architect as part of its staff, as well as the capability of constructing the project in-house.
  2. The owner can hire a contractor to construct a design build project. The contractor then engages the services of an independent architect to design the project. Utilizing this format, the architect is working for the contractor, not the owner.
  3. The owner can hire an architect to construct a design build project. The architect then engages the services of an independent contractor to build the project. Utilizing this format, the contractor is working for the architect, not the owner.

There are projects that are successfully completed using the methods outlined above. However, the preferred method is to engage a licensed architect and a contractor independently, so that both are accountable to the owner.

Donor Advised Fund

A flexible giving device that can accept tax-deductible charitable contributions of cash, securities, appreciated real estate, or other marketable assets, and then distribute funds immediately or over time to charitable 501(c)(3) organizations with the donor's input.



A planning vehicle that provides the ministry with an annual payment that it can count on every year. An endowment requires that the principal remain intact indefinitely—or until sufficient assets have accumulated. The intact principal is invested to create a source of income for your chosen organization or ministry.


The value of interest in real property after all liens and charges have been deducted.


There are two types of exclusions—Standard and Non-Standard.

  1. Standard Exclusions – When receiving bids for a project, the contractor usually attaches a list of exclusions that includes what is generally known as “standard exclusions” in the industry. The list will include such things as permit fees, surveying, utility connection fees, dewatering, removal of contaminated soil, and winter protection. It is always best to review this list with your architect to make sure the excluded items are acceptable.
  2. Non-Standard Exclusions – When submitting a bid for a project, contractors will sometimes attach a list of exclusions that are known as “non-standard” in the industry. These exclusions can vary greatly, and you should review them carefully with your architect, since some of the items may be an integral part of the project.

Fixed Rate Mortgage

A loan on which the same rate of interest is charged for the life of the loan.


Guaranteed Maximum Price (GMP)

A price given to the owner by the contractor or construction manager that represents the amount for which the project will be constructed. This price will not include any changes that may occur due to owner request or unforeseen conditions.



A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

Loan-to-Value Ratio (LTV)

The comparison of the amount of the mortgage loan and the appraised value of the property, expressed as a percentage.


Origination Fee

The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.



A fee charged by the lender to fund a loan, in addition to and separate from other fees charged. One point equals one percent of the amount of the loan. Discount points are charged or received based on the note rate that the borrower selects. Additionally, a one-point origination fee is typically charged by a lender to underwrite a loan.

Project Schedule

A tool to help track the progress of the construction work. Always ask for a project schedule from the contractor or construction manager. This schedule aids the architect when reviewing invoices, since they correlate directly with the percentage of completed work in place.

Purchase Contract

A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale or a sale contract.


Schedule of Values (SOV)

A listing of all the components that make up your project, along with the scheduled dollar value for each item. The SOV is used by the lender for financing purposes, as well as for invoicing and the percentage of completion during the course of the project.


A very important factor to consider when hiring a contractor or construction manager. Always be certain as to the type of supervision you can expect from the firm or individual that you hire. You don’t want to place yourself in a situation where your contractor or construction manager is managing your project from a distance, and you become the hands-on manager of your own project.


A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.


Title Insurance

A policy, usually issued by a title insurance company, which insures a property buyer against errors in the title search. The cost of the policy is usually a function of the value of the property and is often borne by the purchaser and/or seller.

Title Search

An examination of municipal records to determine the legal ownership of property; usually performed by a title company.



The decision whether to fund a loan based on financial statements, assets, and other factors, and the matching of this risk to an appropriate rate and term or loan amount.


Volunteers & In-House Contractors

A great benefit to the owner if it works. There have been successfully completed projects in which a portion of the work was completed by in-house contractors, volunteer labor, or both. However, in most instances, this does not work. The volunteers may not be available when the contractor needs them, and the in-house contractor performing the work for a reduced cost may pay more attention to those projects where he is making a profit. In other words, the project could slow down, possibly causing the contractor to ask the owner for additional compensation because of a delay beyond his control.



Areas within a local government’s jurisdiction in which certain types of land uses are allowed. For example, a zoning ordinance might permit houses but not factories in a neighborhood.

Educational Resources
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