Mortgage Terminology
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
3/1, 5/1, 7/1 & 10/1 ARMs
Adjustable rate mortgages in which the rate is fixed for three-year, five-year, seven-year and 10-year periods, respectively, but may adjust annually after that.
7/23 & 5/25 Mortgages
Mortgages with a one time rate adjustment after seven years and five years respectively.
Acceleration
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due on Sale Clause.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also known as a renegotiable rate mortgage, variable rate mortgage or Canadian rollover mortgage.
Adjusted Basis
The cost of a property plus the value of any capital expenditures for improvements to the property, minus any depreciation taken.
Adjustment Date
The date that the interest rate changes on an adjustable rate mortgage (ARM).
Adjustment Interval
The time between changes in the interest rate and/or monthly payment on an adjustable rate mortgage. This is typically one, three or five years depending on the index.
Adjustment Period
The period elapsing between adjustment dates for an adjustable rate mortgage (ARM).
Affordability Analysis
An analysis of a buyer's ability to afford the purchase of a home. Reviews income, liabilities and available funds. It also considers the type of mortgage you plan to use, the area where you want to purchase a home, and the likely closing costs.
Amortization
Loan payment divided into equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.
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 mortgage.
Annual Percentage Rate (APR)
The measurement of the full cost of a loan, including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of different loans.
Appraisal
An estimate of the value of property made by a qualified professional called an "appraiser."
Appraised Value
The opinion on a property's fair market value based on an appraiser's knowledge, experience and analysis of the property.
Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.
Assignment
The transfer of a mortgage from one person to another.
Assumability
An assumable mortgage can be transferred from the seller to the new buyer. This generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a "due on sale clause," it may not be assumed by a new buyer.
Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming an existing mortgage debt can usually save the buyer money compared to a new mortgage. That's because a new mortgage includes closing cost and new (probably higher) market rate interest charges.
Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.
Adjustable rate mortgages in which the rate is fixed for three-year, five-year, seven-year and 10-year periods, respectively, but may adjust annually after that.
7/23 & 5/25 Mortgages
Mortgages with a one time rate adjustment after seven years and five years respectively.
Acceleration
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due on Sale Clause.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also known as a renegotiable rate mortgage, variable rate mortgage or Canadian rollover mortgage.
Adjusted Basis
The cost of a property plus the value of any capital expenditures for improvements to the property, minus any depreciation taken.
Adjustment Date
The date that the interest rate changes on an adjustable rate mortgage (ARM).
Adjustment Interval
The time between changes in the interest rate and/or monthly payment on an adjustable rate mortgage. This is typically one, three or five years depending on the index.
Adjustment Period
The period elapsing between adjustment dates for an adjustable rate mortgage (ARM).
Affordability Analysis
An analysis of a buyer's ability to afford the purchase of a home. Reviews income, liabilities and available funds. It also considers the type of mortgage you plan to use, the area where you want to purchase a home, and the likely closing costs.
Amortization
Loan payment divided into equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.
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 mortgage.
Annual Percentage Rate (APR)
The measurement of the full cost of a loan, including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of different loans.
Appraisal
An estimate of the value of property made by a qualified professional called an "appraiser."
Appraised Value
The opinion on a property's fair market value based on an appraiser's knowledge, experience and analysis of the property.
Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.
Assignment
The transfer of a mortgage from one person to another.
Assumability
An assumable mortgage can be transferred from the seller to the new buyer. This generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a "due on sale clause," it may not be assumed by a new buyer.
Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming an existing mortgage debt can usually save the buyer money compared to a new mortgage. That's because a new mortgage includes closing cost and new (probably higher) market rate interest charges.
Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.
