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| A
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| Acceleration
Clause |
| A
provision in a mortgage that gives the lender the
right to demand payment of the entire principal
balance if any monthly payments are missed.
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| Acceptance
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| An
offer's consent to enter into a contract and be
bound by the terms of the offer. |
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| Additional
Principal Payment |
| A
payment by a borrower of more than the scheduled
principal amount due in order to reduce the remaining
balance on the loan. |
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| Adjustable
Rate Mortgage (ARM) |
| A
mortgage that permits the lender to adjust its interest
rate periodically on the basis of changes in a specified
index. |
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| Adjustment
Date |
| The
date on which the interest rate changes for an adjustable-rate
mortgage (ARM). |
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| Adjustment
Period |
| The
period that elapses between the adjustment dates
for an adjustable-rate mortgage (ARM). |
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| Amortization
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| The
gradual repayment of a mortgage loan by installments.
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| Amortization
Schedule |
| A
timetable for payment of a mortgage loan. An amortization
schedule shows the amount of each payment applied
to interest and principal and shows the remaining
balance after each payment is made. |
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| Amortize
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| To
repay a mortgage with regular payments that cover
both principal and interest. |
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| Annual
Percentage Rate (APR) |
| The
cost of a mortgage stated as a yearly rate; includes
such items as interest, mortgage insurance, and
loan origination fees (points). |
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| Application
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| A
form used to apply for a mortgage loan and to record
pertinent information concerning a prospective mortgagor
and the proposed security. |
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| Appraisal
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| A
written analysis of the estimated value of a property
prepared by a qualified appraiser. Contrast with
home inspection. |
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| Appraised
Value |
| An
opinion of a property's fair market value, based
on an appraiser's knowledge, experience, and analysis
of the property. |
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| Appreciation
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| An
increase in the value of a property due to changes
in market conditions or other causes. The opposite
of depreciation. |
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| Assessed
Value |
| The
valuation placed on property by a public tax assessor
for purposes of taxation. |
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| Asset
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| Anything
of monetary value that is owned by a person. Assets
include real property, personal property, and enforceable
claims against others (including bank accounts,
stocks, mutual funds, and so on). |
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| Assignment
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| The
transfer of a mortgage from one person to another.
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| Assumable
Mortgage |
| A
mortgage that can be taken over ("assumed")
by the buyer when the home is sold. |
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| Assumption
Clause |
| A
provision in an assumable mortgage that allows a
buyer to assume responsibility for the mortgage
from the seller. The loan does not need to be paid
in full by the original borrower upon sale or transfer
of the property. |
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| Assumption
Fee |
| The
fee paid to a lender (usually by the purchaser of
real property) resulting from the assumption of
an existing mortgage. |
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B
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| Balance
Sheet |
| A
financial statement that shows assets, liabilities,
and net worth as of a specific date. |
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| Balloon
Mortgage |
| A
mortgage that has level monthly payments that will
amortize over a stated term but that provides for
a lump sum payment to be due at the end of an earlier
specified term. |
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| Bankruptcy
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A proceeding in the federal courts in which a debtor,
who owes more that his or her assets can repay,
can relieve those debts by transferring his or her
assets to a trustee. |
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| Beneficiary
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| The
person designated to receive the income from a trust,
estate, or a deed of trust. |
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| Binder
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A preliminary agreement secured by the payment of
an earnest money deposit, under which a buyer offers
to purchase real estate. |
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| Blanket
Insurance Policy |
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A single policy that covers more than one piece
of property (or more than one person). |
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| Bridge
Loan |
| A
form of second trust that is collateralized by the
borrower's present home (which is usually for sale)
in a manner that allows the proceeds to be used
for closing on a new house before the present home
is sold. Also known as "swing loan".
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| Broker
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A person who, for a commission or a fee, brings
parties together and assists in negotiating contracts
between them. See mortgage broker. |
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Buydown Account |
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An account in which funds are held so that they
can be applied as part of the monthly mortgage payment
as each payment comes due during the period that
an interest rate buydown plan is in effect.
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Buydown Mortgage |
| A
temporary buydown is a mortgage on which an initial
lump sum payment is made by any party to reduce
a borrower's monthly payments during the first few
years of a mortgage. A permanent buydown reduces
the interest rate over the entire life of a mortgage.
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