Glossary results for: A
A-Credit
A consumer with the best credit rating who is qualified by their score to receive the lowest rates with zero penalty on loan payoff. Require a FICO above 720. (This may change due to the housing crash.)
Accrued Interest
Accrued interest is all of the interest since the beginning of the principal investment or since the last payment was applied toward the interest of the note.
Adjustable Rate Mortgage
An adjustable rate mortgage (ARM) is a mortgage loan that does not have a “locked” interest rate. The rate may change periodically based on several factors such as published financial indices, federal interest rates changing and the borrower’s credit worthiness. Sometimes high risk customers are given ARM loans because the lenders see them as higher [...]
Affordability
A tool mortgage lenders use to show a customer’s financial maximum ability to pay for a house. Verification of income is now required such as w2’s investment statements and retirement income.
American Reinvestment and Recovery Act
American Reinvestment and Recovery Act is an economic stimulus package that was signed into law by President Barack Obama on February 17, 2009. It states that 37% is dedicated to tax relief. $288 billion and $144 billion or 18% is allocated to state and local fiscal relief. 45% or $357 billion is allocated to [...]
Amortization
The gradual riddance of a legal responsibility such as a mortgage in regular payments over a specific period of time. Payments have to cover the principal and the interest.
Amortization Schedule
A table showing the mortgage payment broken down by interest and regular amortization payments loan balance tax insurance payments and what is in the escrow account.
Amount Financed
Your amount borrowed minus any fees which you have already paid up front. Be sure to read the Truth in Lending documents. On the Truth in Lending form the loan amount minus “prepaid finance charges”. Example: If your loan is for $1000 and you pay the lender (bank) $100 in charges the amount [...]
Annual Insurance
Insurance purchased by the borrower and required by the lender to protect the property against loss from fire and other hazards, same as home owners insurance.
Annual Percentage Rate
Annual Percentage Rate (APR) calculates the cost to the applicant for the mortgage by taking the total amount borrowed and subtracting certain fees from that amount and then figuring what the interest rate then calculates out to without changing the payment amount. APR is an easily manipulated number which makes it difficult if not impossible [...]
Annual Tax
The Annual Tax is the local property tax that you pay on your home. You may have your lender include your annual tax into your monthly mortgage payment. This will allow you to divide the property tax payment into monthly manageable payments.
Appraisal
An Appraisal is the method by which a home’s value is determined. An appraiser physically examines the property closely and determines its value. Appraisals are typically used either for taxation purposes or to discover a possible selling price for the property in question.
Appraisal Institute
The Appraisal Institute is a global membership association of professional real estate appraisers, with 25,000 members and 91 chapters throughout the world.
Appraisal Management Company
An Appraisal Management Company is a company that is paid for by the lender. These appraisal management companies will then outsource appraisers at a discounted price to the lender.
Assumption of Mortgage
An Assumption of Mortgage takes place when the mortgage owner sells his equity to another buyer and the second buyer assumes the responsibility of continuing the payments until the loan is paid in full. The original borrower is still held responsible by the bank or financial institution for the remainder of the loans terms.
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