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Glossary of Mortgage and Home Equity Terms

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Abstract of Title

A written history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.
ACH (Automatic Clearing House)
Electronic system that debits an authorized bank account and electronically transfers funds scheduled for remittance.
Acquisition Costs
Costs of acquiring property other than purchase price, for example, attorney fees, title insurance, and lender's fees.
Acquisition Loan
See Land Acquisition Loan.
Addendum
An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. FHA and VA require that an addendum be added to or incorporated in a sales contract, if it is written prior to the appraisal.
Additional Principal Payment
A payment by a borrower of more than the scheduled payment due in order to reduce the remaining balance on the loan.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically according to a pre-selected index.
Adjusted Gross Income
A person's total income, as reported on his or her IRS 1040 tax return form, after allowable contributions, deductions, and expenses.
Adjusted Origination Charge
The total of the "origination charge" and the credits or charges for the specific interest rate chosen. The adjusted origination charge cannot change between the Good Faith Estimate (GFE) and settlement statement without a valid changed circumstance.
Adjustment Period
The period of time between the adjustment dates for an adjustable rate mortgage (ARM).
Agreement/Offer
See Purchase Contract.
Agricultural Property
Unimproved property available for farming activities.
Alimony
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse.
ALTA
See American Land Title Association.
American Land Title Association (ALTA)
A national association of title insurance companies, abstractors, and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms.
Amortization
Payment of a debt in regular, periodic installments of combined principal and interest.
Amortization Schedule
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance after each payment is applied..
Annual Percentage Rate (APR)
The cost of credit on a yearly basis, expressed as a percentage. The APR includes the prepaid interest rate, discount points, fees, and other credit charges that the borrower is required to pay, and is therefore a more complete measure of a loan’s cost than the interest rate alone. The loan’s interest rate, not its APR, is used to calculate the monthly principal and interest payment.
Applicant
A prospective borrower who has completed an application.
Application
A printed form (or verbal collection of data) used by a mortgage lender to record necessary information concerning a prospective mortgage.
Application Fee
A sum of money paid towards estimated initial mortgage processing expenses, such as appraisal and credit report.
Appraisal
A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
Appraised Value
An opinion of value reached by an appraiser based upon knowledge, experience, and a study of pertinent data.
Appraiser
A person qualified by education, training, and experience to estimate the value of real and personal property.
Appreciation
An increase in the value of property due to either a positive improvement of real estate in the area or the elimination of negative factors. Commonly used to describe an increase in value through inflation.
APR
See Annual Percentage Rate.
ARM
See Adjustable Rate Mortgage.
Arm's-Length Transaction
Legal slang meaning that there existed no special relationship between the parties involved in a transaction which would contaminate the result.
As Separate Property
Ownership in real property that is to be specifically excluded from community property.
Assessed Valuation
The value that a taxing authority places on real or personal property for the purpose of taxation.
Assessment
A charge against a property for purpose of taxation. This may take the form of a levy for a special purpose, or a tax in which the property owner pays a share of the cost of community improvements according to the valuation of his or her property.
Assumable Mortgage
A mortgage that can be taken over (assumed) by the buyer when a home is sold.
Attorney Fee
The amount a real estate lawyer charges for such transaction-related services as title research, contract review, registering all legal documents, and arranging for the transfer of security deposits and insurance certificates.
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