Real Estate Glossary and Definitions
Acceleration clause: a security mechanism in your mortgage, which permits the lender to demand immediate payment of the outstanding loan balance for any number of reasons.
Adjustable-rate mortgage (ARM): Tied multiple indexes, an ARM is a mortgage where the interest rate changes based on fluctuating market indexes.
Amortization: Most home loans are structured so that part of the payment is applied to interest on the debt, with the remaining sum being applied to the principal of the loan. As payments are made, the interest amount decreases as the loan principal also decreases. The amount then applied to principal increases so that the loan is paid off faster – amortized – in the time spelled out within the loan documents.
Amortization schedule: A timetable provided which visually illustrates the exact amount paid towards principal vs. interest throughout the life of the loan.
Annual percentage rate (APR): Not the note rate on a home loan; rather a federal algorithm establishing a formula, which reflects the actual annual cost of borrowing, conveyed as a percentage rate.
Application: The form utilized during a home loan application; generally conveying buyer’s information regarding income, FICO score, liabilities and assets.
Appraisal: a professional third-party justification of a property’s fair market value. Utilizing recently sold comps from the surrounding neighborhood; a written justification is prepared based on similar properties that have sold in the last six months.
Appreciation: An increase in a property’s value based on recently sold comps in a specific surrounding market.
Assessed value: The County tax assessor’s valuation placed on individual properties.
Assessment: The defining of a properties potential value for the purposes of assessing property taxes.
Assessor: Occasionally friend, sometimes foe; the assessor is a public official who has been designated to establish County property values for the purposes of assessing taxes.
Asset:• Owned items of value by an individual. Liquid assets are chattels they can become quickly diverted into cash; mutual funds, bank accounts, bonds, stocks etc. etc.
Assignment: As ownership of your real estate purchase contract or mortgage is transferred from one company or individual to another, it is called an assignment.
Assumable mortgage: a home loan that can be assumed by the new borrower when a property is sold. Generally, the new homebuyer must first get “qualified” in order to assume any existing loan.
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