| 2/1 Buy Down Mortgage |
The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates
so they can borrow more. The initial starting interest rate increases by 1% at
the end of the first year and adjusts again by another 1% at the end of the second year.
It then remains at a fixed interest rate for the remainder of the loan term.
Borrowers often refinance at the end of the second year to obtain the best long
term rates; however, even keeping the loan in place for three full years or more
will keep their average interest rate in line with the original market conditions. |
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| Acceleration Clause |
| Provision in a mortgage that allows the lender to demand
payment of the entire principal balance if a monthly
payment is missed or some other default occurs. |
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| AdditionalPrincipal Payment |
| A way to reduce the remaining balance on the loan by
paying more than the scheduled principal amount due. |
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| Adjustable-Rate Mortgage (ARM) |
| A mortgage with an interest rate that changes during the
life of the loan according to movements in an index rate.
Sometimes called AMLs (adjustable mortgage loans) or VRMs
(variable-rate mortgages). |
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| Adjusted Basis |
| The cost of a property plus the value of any capital
expenditures for improvements to the property minus any
depreciation taken. |
|
| Adjusted Date |
| The date that the interest rate changes on an
adjustable-rate mortgage (ARM). |
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| Adjustment Period |
| The period elapsing between adjustment dates for an
adjustable-rate mortgage (ARM). |
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| Affordability Analysis |
| An analysis of a buyers ability to afford the purchase of
a home. Reviews income, liabilities, and available funds,
and considers the type of mortgage you plan to use, the
area where you want to purchase a home, and the closing
costs that are likely. |
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| Amortization |
| The gradual repayment of a mortgage loan, both principal
and interest, by installments. |
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| Amortization Term |
| The length of time required to amortize the mortgage loan
expressed as a number of months. For example, 360 months
is the amortization term for a 30-year fixed-rate
mortgage. |
|
| Annual Percentage Rate (APR) |
| The cost of credit, expressed as a yearly rate including
interest, mortgage insurance, and loan origination
fees. This allows the buyer to compare loans, however APR
should not be confused with the actual note rate. |
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| Appraisal |
| A written analysis prepared by a qualified appraiser and estimating the value of a property. |
|
| Appraised Value |
| An opinion of a property's fair market value, based on an
appraiser's knowledge, experience, and analysis of the
property. |
|
| Asset |
| Anything owned of monetary value including real property,
personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, etc.). |
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| Assignment |
| The transfer of a mortgage from one person to another. |
|
| Assumability |
| An assumable mortgage can be transferred from the seller
to the new buyer. Generally requires a credit review of
the new borrower and lenders may charge a fee for the
assumption. If a mortgage contains a due-on-sale clause,
it may not be assumed by a new buyer. |
|
| Assumption Fee |
| The fee paid to a lender (usually by the purchaser of
real property) when an assumption takes place. |
