MORTGAGE GLOSSARY
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Abstract (Of Title) A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.
Acceleration Clause Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.
Adjustable-Rate Mortgage (ARM) A mortgage that changes interest rate periodically based upon the changes in a specified index.
Agreement of Sale Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.
Amortization A payment plan which enables the borrower to reduce his debt gradually through monthly payments of principal.
Annual Percentage Rate (APR) What exactly the loan cost. It isthe actual annual cost of the credit. The APR represents the relationship of all the finance charges (interest, loan fees, points) to the amount of the loan.The higher the APR, higher the cost of the credit.
Application A type of form that is used to record pertinent information about a borrower who is seeking a mortgage or a loan to finance real property or an asset. It is known as Uniform Residential Loan Application or from 1003 in mortgage industry.
Appraisal An expert opinion or estimate of the quality or value of real property at a given time..
Appraised value Opinion of a certified appraiser drawn from empirical data and based on on three valuation methodologies.
Appreciation Increase in the value of property due to changes in valuation usually based upon market and other conditions that affect the property. It is the opposite of depreciation where an asset or property loses value.
Assets Anything of value tangible or intangible.
Assumption of Mortgage An obligation undertaken by the purchaser of property to be personally liable for payment of an existing mortgage. In an assumption, the purchaser is substituted for the original mortgagor in the mortgage instrument and the original mortgagor is to be released from further liability in the assumption, the mortgagee's consent is usually required.
The original
mortgagor should always obtain a written release from further liability if he desires to be fully
released under the
assumption. Failure to obtain such a release renders the original
mortgagor liable if the
person assuming the mortgage fails to make the monthly payments.
An "Assumption of Mortgage" is often confused with "purchasing subject to a mortgage." When one purchases subject to a mortgage, the purchaser agrees to make the monthly mortgage payments on an existing mortgage, but the original mortgagor remains personally liable if the purchaser fails to make the monthly payments. Since the original mortgagor remains liable in the event of default, the mortgagee's consent is not required to a sale subject to a mortgage.
Both "Assumption of Mortgage" and "Purchasing Subject to a Mortgage" are used to finance the sale of property. They may also be used when a mortgagor is in financial difficulty and desires to sell the property to avoid foreclosure.