Mortgage Glossary (A)
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Acceleration Clause: A provision in a mortgage note that gives a lender the right to demand repayment of the entire balance of the loan under certain conditions, such as the failure to make timely payments or a transfer of the property.Additional Principal Payment: An amount paid by a borrower of more than the scheduled principal amount due. This type of payment reduces the remaining balance and shortens the term of the loan. Also called a "principal curtailment."
Adjustable Rate Mortgage (ARM): A mortgage that permits the lender to periodically adjust the interest rate on the basis of changes in a specified index.
Adjustment Date: The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period: For an adjustable-rate mortgage, the time period between interest rate change dates, as stated in the mortgage note.
Affordability Analysis: An estimation of a borrowers ability to afford the purchase of a home and/or the payment on a loan. An affordability analysis may consider income, liabilities, the type of mortgage, the loan amount, purchase price, the expected closing costs, and other factors.
Amortization: The gradual reduction of the mortgage debt through regularly scheduled payments over the term of the loan.
Amortization Schedule: A timetable for payment of a mortgage loan. An amortization schedule shows: the amount of each payment; the amount to be applied to principal and interest; and the remaining principal balance after each payment is made.
Amortize: To repay a mortgage with regular payments that cover both principal and interest.
Annual Percentage Rate (APR): The measure of the cost of credit stated as a yearly rate; includes such items as the stated interest rate, plus certain charges.
Annuity: An amount paid yearly or at other regular intervals, often at a guaranteed minimum amount. Also, a type of insurance policy in which the policy holder makes payments for a fixed period or until a stated age, and then receives annuity payments from the insurance company.
Appraisal: A written estimate or opinion of a propertys value prepared by a qualified appraiser.
Appreciation: An increase in the value of an item (e.g., the increase in the market value of real estate).
Assessed Value: Typically the value placed on property for the purpose of taxation.
Assessor: A public official who establishes the value of a property for taxation purposes.
Asset: Anything of monetary value that is owned by a person or company. Assets include real property, personal property, stocks, mutual funds, etc.
Assignment of Mortgage: A document evidencing the transfer of ownership of a mortgage from one person to another.
Assumable Mortgage: A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the sellers existing mortgage; the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due-on-sale clause, the loan may not be assumed without the lenders consent.
Assumption Fee: A fee a lender charges a buyer who will assume the sellers existing mortgage.
Automated Underwriting: An automated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.