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Glossary of Mortgage Terms
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A B
C D E F G H I J K L M N O P Q R S T U V W X Y Z
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Adjustable Rate
Mortgage: An adjustable rate mortgage, also known as an
ARM for short, is a mortgage with an interest rate that is linked
to an economic index (usually Treasury securities). The interest rate,
and your payments, can be periodically adjusted up or down as the
index changes. Facts
about adjustable rate mortgages or ARM's. Amortization: Amortization or amortisation is the process of decreasing or accounting for an amount over a period of time.A repayment schedule in which the amount you borrow is repaid gradually though regular payback schedule of principal and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal. Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way the rate is expressed. In other words the APR is the total cost of credit to the consumer expressed as an annual percentage of the amount of credit granted. APR is intended to make it easier to compare lenders and loan options. The APR is likely to differ from the "note rate" or "headline rate" advertised by the lender. The concept of APR can be generalized. For example lenders use the same concept to calculate their total earnings on loans and for determining their margin on the loan. Consumers can use the APR concept to compare savings accounts and calculate the earnings on a savings account, taking transaction costs into account. In the US and the UK, lenders are required to disclose the APR before the loan (or credit application) is finalized. APR is a term used with regards to deposit accounts as well. However, when dealing with deposit accounts, Annual Percentage Yield APY or Annual Equivalent Rate AER is the number to be quoted to consumers for comparison purposes. See Annual Percentage Rate. |
| Application for Loan: Those interested in acquiring a mortgage must first make or fill out an initial statement of personal and financial information. This is required by the lender to evaluate and approve your loan. | |
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Application Fee:
Fees are sometimes recquired that are paid upon application.
These fees can sometimes be waived but frequently include charges
for property appraisal ($200-$600) and a credit report ($20-50).
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| Appraisal of Property: Required by most lenders to obtain a loan. An appraised value (USA) or mortgage valuation (Australia) pertains to the assessed value of real property in the opinion of a qualified appraiser or valuer. It is usually used as a pre-qualification & risk-based pricing factor related to the issuance of mortgage loans by a financial institution. Fees can range from $200 US up to $600 US per application. See Mortgage Appraisals | |
| Assumable Mortgage: In real estate an assumed mortgage occurs when a the buyer of a real property is transferred all the obligations of the seller's mortgage. The buyer assumes all the obligations under the mortgage, just as if the loan had been made to the buyer. The major driving force behind assumptions is the lower interest rate on the assumed mortgage relative to current market rates. This method is frequently used when the buyer can not get a better interest rate than the seller currently has. The seller may or may not remain secondarily liable for payments. See Assumable Mortgage | |
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