 Glossary A-B |
Glossary E-L |
| Glossary C-D |
Glossary M-Z |
adjustable-rate mortgage (ARM)
A mortgage in which the interest changes periodically, according to the index it's tied to.
amortization
Your loan payment has two parts: the first part pays the accruing interest on a loan, and the remainder goes towards the actual principal. Over time, the interest portion decreases as the loan balance decreases, and the amount going to actual principal increases so that the loan is paid off (amortized) in the specified time.
amortization schedule
A table that shows how much of each month's (or however often a payment is due) payment goes towards interest and how much goes towards principal over the entire life of the loan. It also shows the gradual decrease of your remaining loan balance until it reaches zero and the end of the loan's life.
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 you fill out to apply for a mortgage loan. Usually it asks for information bout your income, debts, savings, assets, etc.
appraisal
A report by a licensed home appraise that evaluates a home and justifies the price paid for it, based mainly on the prices paid for comparable homes in the area.
appraised value
The value given to a home from a licensed home appraiser. This is what is deemed a property's fair market value, based mainly on the price of recently sold comparable homes in the area. Since the most recently sold home is the one being appraised, the final value is usually exactly the same as the purchase price.
appraiser
A individual who is licensed to estimate the value of a home based on comparable homes in the area as well as an actual physical visit to the home.
appreciation
The increase in a property's value due to market conditions, inflation, or other factors.
assessed value
The value placed on a property by a tax assessor in order to determine the property's annual taxes.
assumable mortgage
A mortgage that can be "transferred" to a buyer from a seller when the home is sold. Especially important when interest rates have changed from the time the seller assumed the original mortgage to the time a buyer wants to take on the mortgage.
bankruptcy
Declaring bankruptcy means stating that you are unable to meet financial obligations and pay your debts. There are several types of bankruptcies, but the most common individual on is "Chapter 7 No Asset" bankruptcy which relieves a person from most types of debts. Declaring bankruptcy can seriously affect your ability to get a loan for at least 2 years after bankruptcy is finalized.
bill of sale
A written document that transfers the ownership of personal property. For example, if you sell a car to get money for a down payment, you will probably have to show a bill of sale to show where the money came from.
biweekly mortgage
A mortgage in which you pay half of your monthly payment every two weeks instead of the full payment once a month. In this plan, then, you're actually making 13 full payments a year (26 half payments) and paying off your mortgage faster. There are formal programs that work this way, but some charge a fee. With self-discipline you could structure your mortgage this way on your own.
bridge loan
A loan given to someone buying a property when they haven't yet sold their previous property. The loan is down payment on their new property. Most mortgage lenders now will grant a traditional mortgage under this circumstance, so bridge loans are not common.
Broker
In real estate, it's usually someone who runs an office of real estate agents, although some agents are brokers as well. In lending industry, a broker is typically someone who doesn't loan the money themselves, but finds borrowers, does all the work, and finds the borrower an actual money-lender.
buydown
Paying a lump sum up front when getting a mortgage loan in order to have a lower interest rate. Usually the buydown is only for a few years.
