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Mortgage
Glossary - Mortgage and Real Estate Terms Sorted Alphabetically:
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A - adjustable rate mortgage, adjustment interval,
amortization, annual percentage rate (APR)…more
Adjustable Rate Mortgage (ARM) - a mortgage with an interest rate that
changes periodically, according to an index that is selected when the mortgage
is issued. The initial interest rate is lower than that for
fixed rate mortgages, but monthly payments can go up or down when the
rate is adjusted. The most commonly used "indexes" are LIBOR and the 11th
District COFI.
ADJUSTMENT INTERVAL - the period of time between changes in the interest rate
for an adjustable-rate mortgage. Typical adjustable intervals are one year,
three and five years. Monthly payments may not always adjust when the interest
rate does.
AMORTIZATION - the gradual repayment of a loan by installments over a set
period of time.
ANNUAL PERCENTAGE RATE (APR) - along with its now famous Regulation Z, APR was
a product of the 1965 Consumer Credit Protection Act. As was often the case at
that time, different types of funding sources quoted "rates" in many misleading
and deceptive manners. The Federal Government stepped in and created this
National body of consumer law, which protects consumers in many ways. One of
its’ major changes affecting consumer lenders nationwide, the reason for the
creation of an Annual Percentage Rate (APR), was to provide a benchmark for
comparing different types of costs, fees, charges, interest etc. as they get
blended together by one lender or another. APR includes more than only
"interest." It's a stated rate that reflects all the financing costs of a
transaction. The APR includes points, origination fees and other finance
charges in addition to the interest on the loan, and includes them all in a
yearly "percentage rate". As a result, the APR is usually higher than the
"interest" rate alone. It's technically the "yield" or "return on investment
expressed as a percentage" received by the lender. This area of disclosure does
not apply to "commercial" transactions.
APPRAISAL - an originally typed and signed estimate of the value of a property
on a specific date, made by a qualified educated licensed professional called
an "appraiser" for the benefit of the Lender. No photocopy can be used, and no
appraisal done for one lender, then switched to a secondary Lender, would ever
be acceptable. Its’ purpose is to confirm customers assertion of value of
proposed collateral, and to determine an independent valuation for lending
purposes. Generally they are ordered by the loan provider - with a qualified
appraiser - and paid for the customer. They are the property (owned) of the
loan provider; customers are entitled to a copy for their own records at
closing.
APPRAISED VALUE - an opinion of a property's fair market value, based on what a
willing buyer will sell and what a willing seller will pay for a piece of real
property, in an arms-length transaction, and on an appraiser's knowledge,
experience, and analysis of the property.
APPRAISER - a person qualified by education, training, experience and license
to estimate the value of real property. Most funding sources will not accept an
appraisal from just any appraiser; they often have approved appraiser lists of
acceptable individuals or firms with whom they have had experience. An
appraisal from your brother-in-law, or the friendly Realtor down the street,
will not be acceptable to most institutional lender funding sources.
APPRECIATION - an increase in the value of a property due to changes in market
conditions or other causes. The opposite of depreciation.
ASSUMABLE MORTGAGE - a mortgage that can be taken over (assumed) by the buyer
when the home is sold.
ASSUMPTION - the transfer of the seller's existing mortgage to the buyer.
ASSUMPTION FEE - the amount paid, if any, to a lender for the paperwork and
processing of an assumable existing mortgage. Many lenders can refuse to let a
buyer assume the sellers existing mortgage, be sure and check first!
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B – balloon mortgage, bankruptcy, basis point, beneficiary…more
C - caps, cash flow, cash out (second mortgage), cash out refinance…more
D - debt consolidation, debt service, debt reduction plan, debt-to-income
ratio…more
E - earned and unearned income, earnest money, easement, economic life…more
F - Fair Credit Reporting Act, fair market value, Fannie Mae…more
G - good faith estimate, grace period, gradual payment mortgage (GPM),
grantee…more
H - home equity, home improvement loan, Home Mortgage Disclosure Act
(HMDA)…more
I - index, in file credit report, inflation, initial interest rate, ingress and
egress…more
L - lender buy-down mortgage, liability insurance, LIBOR, loan application…more
M - manufactured home, market value, maximum loan amount, mechanic’s lien…more
N - negative amortized (Neg/AM), Neg AM Loans, negative cash flow, net
worth…more
O - obsolescence, off-site improvements, on-site improvements, ordinary
income…more
P – par, partial payment, partnership, party wall, payment shock…more
Q – quality control, quit claim deed, quote…more
R – rate shopper, real property, real estate loans, reconciliation…more
S – sales contract, satisfaction or mortgage, seasoned mortgage, second
mortgage…more
T – tax lien, tenancy in common, tenant, term, title, title insurance…more
U – underwriting, unencumbered property, uniform commercial code (UCC)…more
V – VA (Department of Veterans Affairs) Mortgage, vacancy rate, VA funding
fee…more
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