Abstract (Of Title)
A summary of the public records relating to the
title to a particular piece of land. An attorney
or title insurance company reviews an abstract of
title to determine whether there is any title
defects, which must be cleared before a buyer can
purchase clear, marketable, and insurable title.
Acceleration Clause
Allows a lender to declare the entire outstanding
balance of a loan immediately due and payable
should a borrower violate specific loan provisions
or default on the loan.
Accrued Interest
Interest earned but not yet paid.
Adjustable
Rate Mortgage (ARM)
A variable or flexible rate mortgage with an
interest rate that adjusts periodically according
to the financial index it is based upon plus a
margin. As a result, the interest rate on your
loan and the monthly payment will rise and fall
with increases and decreases in overall interest
rates. To limit the borrower's risk, the ARM
may have a payment or rate cap.
Adjustment Date
The date on which the interest rate changes for an
adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between the adjustment
dates for an adjustable-rate mortgage (ARM).
Agreement of Sale
Contract signed by buyer and seller stating the
terms and conditions under which a property will
be sold.
Alternative Documentation
A method of documenting a loan file that relies on
information the borrower is likely to be able to
provide instead of waiting on verification sent to
third parties for confirmation of statements made
in the application.
Amortization
The reduction of a debt by regular, usually
monthly, installments of principal and interest.
An amortization schedule is a table showing the
payment and the amounts applied to interest and
principal.
Annual
percentage rate (APR)
The cost of credit expressed as a yearly rate,
taking into account interest, points, and other
finance charges. Disclosure of the APR is required
by the federal Truth-in-Lending Act and allows
borrowers to compare the costs of different
mortgage loans.
Application
An initial statement of personal and financial
information required to apply for a loan.
Application Fee
Fee charged by a lender to cover the initial costs
of processing a loan application. The fee may
include the cost of obtaining a property
appraisal, a credit report, and a lock- in fee or
other closing cost incurred during the loan
process.
Appraisal
An estimate of a property's value as of a given
date, determined by a qualified professional
appraiser. The value may be based on replacement
cost, the sales of comparable properties or the
property's ability to produce income.
Appraisal Fee
A fee charged by a licensed, certified appraiser
to render an opinion of market value as of a
specific date.
Appraiser
A person qualified by education, training, and
experience to estimate the value of real property
and personal property.
Appreciation
A property's increase in value due to inflation or
economic factors.
Assessment
Charges levied against a property for tax purposes
or to pay for municipality or association
improvements such as curbs, sewers, or ground
maintenance.
Assignment
A means of transferring ownership, rights, or
interests in property by one person, the assignor,
to another, the assignee. See also C.E.M.
Assumable Mortgage
A mortgage that can be taken over
("assumed") by the buyer when a home is
sold.
Assumption
An agreement between a buyer and a seller which
may require lender approval, where the buyer takes
over the payments for a mortgage and accepts the
liability. Assuming a loan can be advantageous for
a buyer because there are no closing costs and the
loan's interest rate may be lower than current
market rates. Depending on the terms of the
mortgage or deed of trust, the lender may raise
the interest rate or require the buyer to qualify
for the mortgage.
Assumption Clause
A provision in an assumable mortgage that allows a
buyer to assume responsibility for the mortgage
from the seller. The loan does not need to be paid
in full by the original borrower upon sale or
transfer of the property.
Assumption Fee
The fee paid to a lender (usually by the purchaser
of real property) resulting from the assumption of
an existing mortgage.
