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The HSH Mortgage Glossary A-B

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The Mortgage Glossary Index:

A-B C D-E F-I J-M N-P Q-S T-Z

Abstract Of Title
A public record showing a condensed title history of the property.
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Acceleration Clause
A provision which requires that the remaining balance due be paid if the borrower defaults on the loan or transfers title to another party.
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Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically, according to an "index", such as Treasury Bills. Monthly payments can go up or down when the rate is adjusted.
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Adjustment Date
The date that an ARMs interest rate is changed.
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Amortization
The process of paying off the debt or mortgage, usually by equal monthly payments. Monthly payments are mostly interest at first (because the debt is higher) and almost entirely principal in later years, when the loan balance is small.
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Amortization Schedule
A table which shows the distribution of monthly payments - how much will be applied toward principal and how much toward interest over the life of the loan.
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Annual Percentage Rate (APR)
A figure which attempts to reflect the total cost of a loan, expressed as a yearly rate. Because the APR takes the total cost of credit into account, it can never be lower, and is almost higher than the stated note rate or advertised rate. Within reason, the APR allows you to compare different types of mortgages based on the total cost.
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Application Form (1003)
The standard form used to apply for a mortgage. The form used to includes regarding income, savings, assets, debts, and more.
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Appraisal
A written justification of value of a property, usually based on an analysis of the price paid for similar properties in the area.
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Appraised Value
An opinion of the fair value of a property, generally by a qualified and/or licensed professional an appraise.
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Appreciation
The increase in the value of a property over time, usually due to changes in market conditions, inflation, or improvements.
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APR
See Annual Percentage Rate (APR)
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ARM
See Adjustable Rate Mortgage (ARM)
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Assessed Value
The valuation placed on property for the purpose fixing the amount property taxes.
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Assessment
The process of setting the value of a property for tax purposes.
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Asset
Personal and Real property: items of value which can be quickly converted into cash. Bank accounts, stocks, bonds, mutual funds, real estate, personal property, etc.
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Assignment
Transfer of ownership from one individual or company to another. Lenders often assign mortgages which they make to Fannie Mae or other entity which specializes in buying mortgages.
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Assumable Mortgage
A mortgage which can be assumed by the buyer when a home is sold. Not commonly available in recent years.
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Assumption
The process of assuming a mortgage.
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Balloon Mortgage
A fixed rate mortgage with monthly payments which are not large enough to pay off the loan during the term. Balloons end after a specific time, usually one to five years, after which the entire remaining balance must be paid in a lump sum.
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Balloon Payment
The final lump sum payment due at the end of a balloon mortgage.
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Balloon Reset Mortgage
See Two Step Mortgage (Balloon Reset)
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Basis Point
1/100th of a point. See Point
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Bill Of Sale
A written document which transfers titles to personal property, such as an automobile or other valuable property.
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Biweekly Mortgage
A mortgage with payments made every two weeks instead of monthly. Since a bi-weekly has 26 payments per year -- the equivalent of 13 monthly payments -- the loan is paid off much sooner typically in 18 - 20 years as opposed to monthly payments for 30 years. The early payoff saves substantial amounts of interest.
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Bridge Loan
A loan used (usually) to finance the down payment on a new home before the previous property is sold. Previously commonly available, bridge loans are hard to find and are expensive.
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Broker
A person or company that, for a specified fee, provides a service. Real estate brokers bring together buyers and sellers and then facilitate the transaction. Note: most real estate brokers represent the seller, NOT the buyer. Mortgage brokers are individuals or companies which arrange financing but do not lend money directly.
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Buydown
A provision where someone, usually the builder or seller, subsides the mortgage, either by paying extra points or by setting up an escrow account with funds to subsidize the loan during the first few years. The effect is to lower the interest rate for some period of time, which in turn allows the borrower to qualify. The reduced monthly payments increase when the subsidy expires.
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