Mortgage Glossary – A
Interest earned but not yet paid.
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.
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.
Ad Valorem Tax
A tax based according to item value only, usually property tax based on the just or fair market value of the property.
A change made to a contract.
Adjustable Rate Mortgage Loans (ARM)
Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as Treasury bill rates. An interest rate cap limits the amount by which the interest rate can change.
On an ARM loan, the time between changes in the interest rate or monthly payment.
Agreement of Sale
Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.
Repayment of a debt with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time.
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.
Annual Percentage Rate (APR)
The cost of credit expressed as a yearly rate. The annual percentage rate is often not the same as the interest rate. It will be higher than the interest rate stated in the note because it includes in addition to the interest rate, loan discount points, fees and mortgage insurance.
An initial statement of personal and financial information required to apply for a loan.
Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges.
A sum of money paid towards estimated initial mortgage processing expenses such as appraisal and credit report.
A written estimate of a property’s current market value completed by an impartial party with knowledge of real estate markets.
A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific date.
A mortgage that can be taken over (assumed) by the buyer when a home is sold.