REAL ESTATE GLOSSARY
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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.
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.
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