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Mortgage
Terminology
ACCELERATION CLAUSE
Condition in a mortgage that may require the balance of the
loan to become due immediately, if regular payments are not
made.
ADJUSTABLE RATE MORTGAGE (ARM)
A mortgage loan or deed of trust which allows the lender to
adjust the interest rate in accordance with a specified index
periodically and as agreed to at the inception of the loan.
Also called variable rate mortgages (VRM).
ADJUSTMENT DATE
The date of periodic interest rate adjustments for an adjustable
mortgage loan.
AML
AMLs (Adjustable Mortgage Loans). Also referred to as ARMs (Adjustable
Rate Mortages) or VRMs (Variable Rate Mortgages).
AMORTIZATION
Systematic payments to reduce the principal of a mortgage,
along with each payment of interest. Amortized payments are
usually the same each month, but during the early years the
portion for interest is higher. In the later years the portion
for principal is higher.
AMORTIZATION SCHEDULE
A timetable for payment of a mortgage showing the amount of
each payment applied to interest and principal and the remaining
balance.
ANNUAL PERCENTAGE RATE (APR)
A term defined in section 106 of the Federal Truth in Lending
Act, ( PL
90-321;15
USC 1606 ), which expresses on an annualized basis the
charges imposed on the borrower to obtain a loan (defined
in the Act as "finance charges"), including interest, discount
and other costs.
APPRECIATION
An increase in the value of a house due to changes in market
conditions or other causes.
APPRAISAL
A report made by a qualified person setting forth an opinion
or estimate of value. The term also refers to the process
by which this estimate is obtained. The lender receives a
copy of the complete report, showing the basis for the appraisers
estimate.
APPRAISED VALUE
An opinion of value reached by an appraiser based upon knowledge,
experience, and a study of pertinent data.
APPURTENANCES
The easements of, or other rights considered part of a property,
which pass to the purchaser.
ARM Loan
Adustable Rate Morgage Loan. This is a mortgage characterized
by an interest rate and payment amount that can change (increase
or decrease) at regular intervals, based on an established
index. Typically, there is a cap on the margin, which determines
the maximum rate. All ARMs are indexed to a market indicator,
such as the weekly average of one-year US Treasury Bills.
ARMs are also referred to as AMLs (Adjustable Mortgage Loans)
or VRMs (Variable Rate Mortgages).
ASSESSED VALUE
The valuation placed upon property by a public tax assessor
for the purpose of taxation. This is also known as the State
Equalized Value (S.E.V.).
ASSESSMENT
A value factor assigned to real property and used to determine
real property taxes. The process of reaching the assessed
valuation. Also, an add-on tax to raise money for a special
purpose.
ASSUMPTION OF A MORTGAGE
Agreement by a buyer to pay remaining payments on an existing
mortgage. The seller remains obligated if the buyer fails
to pay, unless the lender agrees to release him/her.
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