Understand the most important lending and mortgage terms. Mortgages can be confusing for the first time home buyer, so let us help explain. Below you'll find explanations for most of the mortgage industry terms.

What is Abstract of title? A summary of recorded transactions concerning a particular property. A brief history of the titles for a piece of land. The abstract of title lists all of the legal actions that have been…
Written by Henry Gilbert
What is Acceleration Clause? A term in a mortgage agreement that requires the borrower to pay off the loan immediately under certain conditions. For example, selling the home will trigger the acceleration clause of most…
Written by Henry Gilbert
What is Accrued interest? The amount of mortgage interest that has been earned but not yet…
Written by Henry Gilbert
What is Additional Principal Payment? A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount…
Written by Henry Gilbert
What is Additional Principal Payment? A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount…
Written by Henry Gilbert
What is Adjustable rate? An interest rate that changes periodically according to an…
Written by Henry Gilbert
What is Adjustable-Rate Mortgage (ARM)? A mortgage with an interest rate that adjusts periodically based on a preselected index, causing interest rates and payments to rise and fall with the…
Written by Henry Gilbert
What is Adjusted Basis? The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation…
Written by Henry Gilbert
What is Adjustment interval? The time between changes in the interest rate and monthly payments on an…
Written by Henry Gilbert
What is Adjustment Period? The period elapsing between adjustment dates for an adjustable-rate mortgage…
Written by Henry Gilbert
What is Affordability Analysis? An analysis of a buyers ability to afford the purchase of a home. Reviews income, liabilities, and available funds, and considers the type of mortgage you plan to use, the area where you want to…
Written by Henry Gilbert
What is Agent? One that acts for or represents…
Written by Henry Gilbert
What is Agreement of sale? Also known as a "sales contract," a written document in which a purchaser agrees to buy property under certain given conditions, and the seller agrees to sell under certain given…
Written by Henry Gilbert
What is Alternative documentation? A method of documenting a loan file that relies on information the borrower is likely to be able to provide, instead of waiting on verification sent to third parties for confirmation of statements…
Written by Henry Gilbert
What is Amortization? A monthly repayment schedule in which a loan is repaid in fixed payments of principal and…
Written by Henry Gilbert
What is Amortization re-cast limitation? Amortization is most often "capped" at 110 or 125 percent of the original principal balance. Re-amortization typically occurs every 60 months and/or at such time as the balance reaches the…
Written by Henry Gilbert
What is Amortization re-cast period? Pre-determined period of time (expressed either in a number of months and/or a percent of increase from original principal balance) after which any/all accumulated "negative amortization" (aka…
Written by Henry Gilbert
What is Amortization Term? The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year fixed-rate…
Written by Henry Gilbert
What is Annual percentage rate (APR)? The annual cost of a loan, expressed as a yearly rate. APR takes into account interest, discount points, lender fees and mortgage insurance, so it will be slightly higher than the interest rate on…
Written by Henry Gilbert
What is Application? Often referred to as a 1003, an initial statement of personal and financial information required to approve your…
Written by Henry Gilbert
What is Application fee? A fee charged by a lender to cover initial costs of processing a loan application, often including charges for property appraisal and a credit…
Written by Henry Gilbert
What is Appraisal? A written estimate of a property's current market value, based on recent sales information for similar properties, the current condition of the property and how the neighborhood might affect future…
Written by Henry Gilbert
What is Appraisal fee? A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific…
Written by Henry Gilbert
What is Appraised Value? An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the…
Written by Henry Gilbert
What is APR? See Annual Percentage…
Written by Henry Gilbert
What is ARM? See Adjustable-Rate…
Written by Henry Gilbert
What is ARM assumbility? Some ARM products feature "assumability" to a qualified applicant. The assumability of an ARM loan may make it more attractive to an applicant who envisions selling their home at a later date. By…
Written by Henry Gilbert
What is ARM disclosure? An additional disclosure specific to adjustable-rate mortgages that must be prepared and presented to the consumer within three days of application whenever an adjustable-rate mortgage transaction is…
Written by Henry Gilbert
What is ARM handbook? The Consumer Handbook to Adjustable-Rate Mortgages ("CHARM" booklet) must be presented to the consumer within three days of applying for an ARM loan (in addition to the ARM disclosure referenced…
Written by Henry Gilbert
What is Asking Price? The price requested by a seller when a home or property is listed for sale. This amount is often open to negotiation. The asking price may also be referred to as the “list price” or “listing…
Written by Henry Gilbert
What is Assessment? A local tax levied against properties that have benefited from civil improvements such as road or sidewalk construction, a sewer or street…
Written by Henry Gilbert
What is Asset? Anything of monetary value that a person owns. Assets include real property, personal property and enforceable claims against others (including bank accounts, stocks, mutual funds and so…
Written by Henry Gilbert
What is Assignment? The transfer of property rights from one person to…
Written by Henry Gilbert
What is Assumability? A feature of a loan allowing it to be transferred to the new purchaser of a home. Assumable mortgages can help attract buyers because assumption of a loan requires lower fees and/or qualifying…
Written by Henry Gilbert
What is Assumption? Agreement between buyer and seller for the buyer to take over the payments on an existing…
Written by Henry Gilbert
What is Assumption Fee? The fee paid to a lender (usually by the purchaser of real property) when an assumption takes…
Written by Henry Gilbert


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