Home Loan Glossary
Acceleration Clause Allows the lender to speed up the rate at which your loan comes due or even to demand immediate payment of the entire outstanding balance of the loan should you default on your loan or violate the Due on Sale Clause.
Adjustable Rate Mortgage (ARM) A mortgage in which the interest rate is adjusted periodically according to the movement in a pre-selected index. Technically, ARM's do not include mortgages where the payments change for other reasons, such as buydowns, although the term is often used in this broader sense. Adjustable rate mortgages are also sometimes known as the renegotiable rate mortgage, the variable rate mortgage, or the Canadian rollover mortgage.
ALT-A Loan programs that offer borrowers "alternative documentation" choices such as Stated Income (income is stated, not proven; job and liquid assets are verified), No Doc loans (both income and assets are stated without proof), NINJA loans (no proof of income, job or assets; sections are left blank on the application. The borrower only needs a high credit score to qualify) and No Doc loans are rarely available. The closest you can get to these loans now is with Non-QM Loans.
AmortizationThe repayment of a mortgage loan over a fixed period of time by installments of regular payments to cover the principal and interest.
Annual Percentage Rate (APR) A figure which reflects the cost of a mortgage as a yearly rate. This rate is likely to be higher than the interest rate stated on the note or the advertised rate on the mortgage, because it takes into account other costs (such as borrower paid origination fees, mortgage insurance, interim interest and other credit costs.) The APR is intended to help homebuyers compare different types of mortgages based on the annual cost for each loan.
Appraisal an estimate of the value of property, made by a qualified professional appraiser. The appraisal is an important factor in determining the interest rate, and whether Mortgage Insurance will be required on the loan.
Appreciation An increase in the value of a house due to changes in the market conditions or other causes.
Assessment A local tax levied against a property for a specific purpose, such as a sewer or a street light.
Assessed Value the valuation placed upon a property by a public tax assessor for the purpose of taxation.
Assumption The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming the loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing costs and a new, possibly higher, market rate interest charge will apply.