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Assumption
The agreement between seller and buyer where the seller hands over the payments of an existing mortgage to the buyer. As this is an existing mortgage debt, the loan assumption can usually save the buyer money. This agreement has advantages over the acquisition of a new mortgage where closing cost and new, most likely higher, market-rate interest charges apply. |
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Assessment
A charge against a property for purposes of taxation. This charge may develop into a levy for a special reason. It may also take the form of a tax in which the owner of the property pays a share of the cost of community improvements in relation to the appraisal of his or her property.
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Assessed Valuation
A taxing authority places this value on personal or real property for the purpose of taxation.
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Appraisal
An estimation of the value of property based on the latest sales information of similar properties. It is carried out by a qualified professional called an "appraiser".
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Application Fee
The lender charges this fee to the borrower for applying for a loan. Paying for this fee does not guarantee loan approval. A number of lenders may apply the cost of the application fee to certain closing costs. |
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Annual Percentage Rate (APR)
Annual Percentage Rate is a measurement of the total cost of a loan, which includes loan fees and interest expressed as a yearly percentage rate. It provides consumers with a good basis for comparing the cost of loans as mostly all lenders apply similar rules in calculating the APR.
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Amortization
From the root “mort”, it literally means to “kill off” the remaining balance of a loan by making equal payments on a usually monthly basis or a regular schedule. With each equal payment, the borrower pays both interest and principal. |
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Adjustment Interval
On an adjustable rate mortgage (ARM), the time in amid variations in the interest rate and/or monthly payment. Depending on the index, it is typically one, three or five years.
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Adjustable Rate Mortgage (ARM)
A type of mortgage loan (also called variable rate mortgage), which usually lasts 30 years, where the interest rate varies and depends on a particular preselected interest rate index. This type of loan has an advantage, which is that lenders normally offer initial discounts (teaser rates) on the interest rate index making the loans more affordable than a traditional fixed rate mortgage. Also, the loan payment fluctuates depending on the actual financial conditions of the economy. This can be an advantage if interest rates stay constant or decline throughout the life of the loan. The disadvantage of this kind of loan is that your exact payment over time is unpredictable and may increase.
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Acceleration
The right of the lender (mortgagee) to demand the immediate repayment of the mortgage loan balance leading to the default of the borrower (mortgagor), or by using the right vested in the Due-on-Sale Clause. |
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