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| Buying,
selling, or refinancing can be a frustrating and
overwhelming endeavor due to the vast and
complicated terminology used to close a real estate
transaction. Fortunately, this real estate and
mortgage glossary - dictionary can help you ease the confusion
and will certainly help you better understand terms
that you may not fully understand. |
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Acceleration Clause
The clause/section in a mortgage or trust deed that
stipulates that the debt, in its entirety, is due
immediately if the mortgagee defaults under the
terms of the contract.
Acquisition Cost
The purchase price or appraised value of the
property, plus the approximate/estimated closing
costs under an F.H.A loan.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate (%) is
adjusted periodically (monthly, bi-yearly, or
yearly) based on an index. It is also called a
variable rate mortgage.
Adjustment Date
The date the interest rate (%) changes on an A.R.M.
Adjustment Interval
For an adjustable rate mortgage(ARM), the time
between changes in the interest rate charged. The
most common adjustment periods are 1, 3 or 5 years.
Adjusted Book Basis
The purchase price of a property, plus any capital
improvements, less accrued depreciation, if any, to
the date of the sale.
Amortization
Literally, to "kill off" the outstanding balance of
a loan by making equal payments on a regular
schedule (monthly). The payments are prepared so
that the borrower pays both principal & interest
with each equal payment.
Annual Percentage Rate (APR)
A figure that states the total yearly cost of a
mortgage as expressed by the actual rate of interest
paid. The A.P.R. includes the base interest rate,
points, and any other add-on loan fees & costs. As a
result, the A.P.R. is invariably higher for the rate
of interest that the lender quotes for the mortgage,
but gives a more accurate picture of the likely cost
of the loan. Keep in mind, however, that most
mortgages are not held for their full 15 or 30 year
terms. So the effective annual percentage rate is
higher than the quoted A.P.R. because the points &
loan fees are spread out over fewer years.
Annuity
A series of income payments of receipts over a
number of years.
Application
A mortgage application requires borrowers to present
information regarding their income, employer,
savings, assets, debts, and other pertinent
information.
Application Fee
The fee charged by the lender/bank to the borrower
for applying for a loan. Unfortunately, paying this
fee does not guarantee that a loan will be
ultimately approved. Some banks may apply the cost
of the application fee to certain closing costs.
Appraisal
Determining property value based on recent sales
information of comparable properties.
Appraised Value
An opinion of a property's fair market value, based
on an appraiser's knowledge, experience, and
analysis of the property. Since an appraisal is
based primarily on comparable sales, and the most
recent sale is the one on the property in question,
the appraisal usually comes out at the purchase
price.
Appraiser
A person trained and licensed to conduct and prepare
appraisal reports of properties (real property) as
well as personal property.
Appreciation
When property values increase due to fluctuations in
the market, inflation, etc.
Assessed Value
When a public tax assessor places valuation on
property for taxation purposes.
Assessment
To determine a property's value for taxation
purposes.
Assessor
A public official who determines property values for
taxation purposes.
Asset
Items of value -- encumbered or not -- owned by a
corporation, private person, or entity.
Liquid assets, which include bank accounts, stocks,
bonds, mutual funds, and so forth, are those that
can quickly be converted to cash. Other assets
include the following: personal property, real
estate, as well as debts owed to an individual by
others.
Assignment
The transferring of ownership of your mortgage from
one company or individual to another.
Assumable Loan/Mortgage
Loans that may be passed on from a home seller to
the buyer, whereby the buyer "assumes"(takes over)
all outstanding payments. The buyer usually must
meet qualification standards to assume a loan.
Assumption
Buying property & assuming all the responsibilities
of the exiting mortgage. |
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