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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 cap
See: Cap

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.

ARM
See Adjustable Rate Mortgage

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.

Aztec
See Recognition Agreement.

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