Glossary of terms used on this site
There are 108 entries in this glossary.All
| Term | Definition |
|---|---|
| Adjustable Interest Rate |
Adjustable rates will change or fluctuate and the interest rate may go up or down as the index that the particular rate is connected to moves or changes direction. |
| Adjustable Rate Mortgage (ARM) |
The ARM mortgage interest rate is based on the interest rate of a prevailing index, so rather than always staying the same it is possible for the interest rate on an ARM mortgage to go up or down in tandem, as prevailing rates also go up or down. |
| Agreement to Purchase (Sales Contract) |
A purchase agreement, agreement to purchase, or sales contract is a document executed between a buyer and seller that spells out the terms of the agreement and the price. Signing an agreement to purchase is the first official step in a home buying transaction. |
| Alternative Verification or Documentatio |
Use of alternative verification or documentation happens when the borrower provides information about their finances or other pertinent details, versus having a third party underwriter confirm and validate those statements. |
| Amortization Schedule or Table |
A chart or table that shows the whole monthly repayment schedule for a loan with fixed payments of principal and interest, charted for the entire life of the loan. |
| Annual Percentage Rate (APR) |
How much a loan costs per year, including the cost of such things as interest payments, loan fees, and mortgage insurance. |
| Appraisal |
An appraisal is a written estimate of value derived at by a licensed and certified appraiser. Although there are many types of appraisals, the most common on in real estate is a market appraisal which estimates the current market value of the property. Lenders use appraisals to determine how much money to lend on a particular property that will serve as loan collateral. |
| ARM Loan Disclosures |
By law, any lender processing an Adjustable Rate Mortgage must disclose the terms of the loan to the borrower within three days of loan application, using an approved ARM disclosure document. |
| Assets |
Assets are anything that has value – and in the loan business these include such things as homes, cars, stocks and bonds, and money in checking or savings accounts. |
| Assignment of Property |
When the ownership of a property is passed from one person to another through legal means, the property is “assigned” to the new owner. |
| Assumable ARM |
This kind of ARM loan can be taken over by another borrower who “assumes” responsibility for making the monthly payments. Being assumable can make a mortgage easier to transfer and that may be a selling feature for someone who wants to sell their mortgaged home. |
| Assumption of a Loan |
This happens when a buyer of a home takes over the assumable mortgage and mortgage payments of the seller or previous owner, rather than getting a new loan to finance the purchase. |
| Balance Sheet |
An accounting document that shows a financial snapshot of a person or business including assets, liabilities, and income or revenues. |
| Balloon Mortgage or Balloon Payment |
Loans of short duration may have relatively low monthly payments but when the loan balance becomes due the borrower has to make a much larger single payment, known as the balloon payment – because the payment amount expands like a balloon. |
| Bankruptcy |
A legal procedure that allows the court system to oversee the orderly dissolution of one’s debt obligations. The goal is to pay creditors as much as possible while also letting the person or company filing for bankruptcy get protection from total financial ruin. |
