Acceleration
clause
A clause in your mortgage which allows the lender to demand
payment of the outstanding loan balance for various reasons.
The most common reasons for accelerating a loan are if
the borrower defaults on the loan or transfers title to
another individual without informing the lender.
Adjustable-rate
mortgage (ARM)
A mortgage in which the interest changes periodically,
according to corresponding fluctuations in an index. All
ARMs are tied to indexes.
Adjustment
date
The date the interest rate changes on an adjustable-rate
mortgage (ARM).
Amortization
The loan payment consists of a portion which will be applied
to pay the accruing interest on a loan, with the remainder
being applied to the principal. Over time, the interest
portion decreases as the loan balance decreases, and the
amount applied to principal increases so that the loan
is paid off (amortized) in the specified time.
Amortization
schedule
A table which shows how much of each payment will be applied
toward principal and how much toward interest over the
life of the loan. It also shows the gradual decrease of
the loan balance until it reaches zero.
Annual
percentage rate (APR)
This is not the note rate on your loan. It is a value
created according to a government formula intended to
reflect the true annual cost of borrowing, expressed as
a percentage. It works sort of like this, but not exactly,
so only use this as a guideline: deduct the closing costs
from your loan amount, then using your actual loan payment,
calculate what the interest rate would be on this amount
instead of your actual loan amount. You will come up with
a number close to the APR. Because you are using the same
payment on a smaller amount, the APR is always higher
than the actual not rate on your loan.
Application
The form used to apply for a mortgage loan, containing
information about a borrower’s income, savings, assets,
debts, and more.
Appraisal
A written justification of the price paid for a property,
primarily based on an analysis of comparable sales of
similar homes nearby.
Appraised
value
An opinion of a property's fair market value, based on
an appraiser's knowledge, experience, and analysis of
the property. Since an appraisal is based primarily on
comparable sales, and the most recent sale is the one
on the property in question, the appraisal usually comes
out at the purchase price.
Appraiser
An individual qualified by education, training, and experience
to estimate the value of real property and personal property.
Although some appraisers work directly for mortgage lenders,
most are independent.
Appreciation
The increase in the value of a property due to changes
in market conditions, inflation, or other causes.
Assessed
value
The valuation placed on property by a public tax assessor
for purposes of taxation.
Assessment
The placing of a value on property for the purpose of
taxation.
Assessor
A public official who establishes the value of a property
for taxation purposes.
Asset
Items of value owned by an individual. Assets that can
be quickly converted into cash are considered "liquid
assets." These include bank accounts, stocks, bonds,
mutual funds, and so on. Other assets include real estate,
personal property, and debts owed to an individual by
others.
Assignment
When ownership of your mortgage is transferred from one
company or individual to another, it is called an assignment.
Assumable
mortgage
A mortgage that can be assumed by the buyer when a home
is sold. Usually, the borrower must "qualify"
in order to assume the loan.
Assumption
The term applied when a buyer assumes the seller’s
mortgage.
