Mortgage & Loan Glossary
Please feel free to use our Mortgage & Loan Glossary to help understand real estate industry terms.
Abstract of Title
A historical summary of all the recorded transactions that affect the title to the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title.
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
Accelerated Mortgage Plan
A plan that increases the amount or frequency of loan payments so as to pay down the principal owed on a property before the standard term expires. If done correctly, an accelerated mortgage plan can save thousands of dollars in interest and provide full ownership of a property in less time than would be required if only the minimum required payment were made throughout the life of the loan.
Formal declaration before a public official (typically a Notary Public) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust.
A measure of land equal to 43,560 square feet.
Adjustable-Rate Mortgage (ARM)
A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
This is the length of time for which the interest rate is fixed on an adjustable. Therefore if the adjustment period is six months, then the interest rate will remain fixed for six months, after which time it will adjust.
Agreement of Sale
A written signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also known as contract of purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement.
Payment of a debt in regular, periodic installments of principal and interest as opposed to interest only payments.
Annual Percentage Rate (APR)
A term used in the Truth-in-Lending Act to represent the percentage relationship of the total finance charge to the amount of the loan. The APR reflects the cost of your mortgage loan as a yearly rate. It will be higher than the interest rate stated on the note because it includes, in addition to the interest rate, loan discount points, fees and mortgage insurance.
A printed form used by a mortgage lender to record necessary information concerning a prospective mortgage.
A sum of money paid towards estimated initial mortgage processing expenses such as appraisal and credit report.
A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
The increase in the value of a property due to changes in market conditions, inflation, or other causes.
As Separate Property
Ownership in real property which is to be specifically excluded from community property.
The value that a taxing authority places on real or personal property for the purpose of taxation.
A charge against a property for purpose of taxation. This may take the form of a levy for a special purpose or a tax in which the property owner pays a share of the cost of community improvements according to the valuation of his or her property.
Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.” These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.
A mortgage loan which allows a new home buyer to take over the obligation of making loan payments with no change in the terms of the loan. Assumable loans do not have a due-on-sale clause. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments.
Attorney In Fact
One who is authorized to act for another under a power of attorney which may be general or limited in scope.