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Real Estate Glossary
To view a real estate term, click on one of the letters below.
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Acceptance - A buyer's or seller's agreement to enter into a contract and be
bound by the terms of the offer.
Additional Principal Payment - A payment made by a borrower of more than the
scheduled principal amount due, in order to reduce the outstanding balance on
the loan, to save on interest over the life of the loan and/or pay off the loan
early.
Adjustable Rate Mortgage (ARM) - stands for Adjustable Rate Mortgage, also
referred to as a Variable Rate Mortgage. They both mean the same thing. An ARM
is a mortgage with an interest rate that adjusts periodically to reflect changes
in market conditions. Your mortgage payments are adjusted up or down (usually on
an annual basis) as the interest rate changes. To protect you in a rising
interest market, rate increases are limited (usually 2 percentage points
annually; 6 percentage points over the life of the loan).
Amenity - A feature of real property that enhances its attractiveness and
increases the occupant's or user's satisfaction, although the feature is not
essential to the property's use. Natural amenities include a pleasant or
desirable location near water, scenic views, etc. Man-made amenities include
swimming pools, tennis courts, community buildings, and other recreational
facilities.
Amortization - The gradual repayment of a home loan by periodic installments.
Amortization Schedule - A timetable for payment of a home loan. An amortization
schedule shows the amount of each payment applied to interest and principal and
the remaining balance after each payment is made.
Amortization Term (period) - The amount of time it takes to pay off the loan.
The amortization term is expressed as a number of months. For example, for a 30
year fixed rate loan, the amortization term is 360 months.
Amortize - To repay a loan with regular payments that cover both principal and
interest.
Annual Percentage Rate (APR) - stands for Annual Percentage Rate. This refers to
the interest rate that reflects the actual cost of a mortgage as a yearly rate.
Because APR includes points and other costs associated with the mortgage, it's
usually higher than the advertised simple interest rate. The APR more accurately
reflects what you'll be paying and allows you to compare different mortgages
based on actual costs.
Application (or 1003) - A form to be completed by a home loan applicant with the
lender's assistance to provide pertinent information about a prospective
borrower's employment, income, assets, debts and other financial information,
about the purpose of the home loan, and about the property securing the home
loan. Lenders also sometimes call it a 1003-the form number of Fannie Mae's
standard application form.
Application Fee - A fee usually paid at the time an application is given to a
lender for helping to complete and review an application. Some lenders collect
fees for a property appraisal and a credit report, instead of an application
fee, at the time of application.
Appraisal - An estimate of the value of a home, made by a professional
appraiser. The maximum amount of the mortgage is usually based on the appraisal.
Appraised Value - The dollar figure for a property's estimated fair market
value, based on an appraiser's knowledge, experience, and analysis of the
property and comparable properties near by.
Appraiser - A person qualified by education, training, and experience to
estimate the value of real property.
Appreciation - An increase in the value of a property due to changes in market
conditions or other causes. Inflation, increased demand, home improvement, and
sweat equity are all causes of appreciation. The opposite of depreciation.
Assessed Value - The value used to determine property taxes, based on a public
tax assessor's opinion. Contrast with appraised value.
Assessment - The amount of tax due to local government. May also refer to the
amount due to local government or to common owners of a property (e.g., a
homeowner's association) for a special payment to cover expenses for
improvements or maintenance, such as new sewers or roads.
Assessment Rolls - A public record of the assessed value of property in the
taxing jurisdiction.
Assessor - A public official who establishes the value of a property for
taxation purposes.
Asset - Anything of monetary value that is owned by a person. Assets include
real property, personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on).
Assumable Loan - A home loan that allows a new purchaser of the home to take
over ("assume") the loan obligations of the seller when a home is sold.
Assumption Clause - A provision in an assumable loan that allows a buyer to
assume responsibility for the home loan from the seller. The loan does not need
to be paid in full by the original borrower (seller) upon sale or transfer of
the property.
Assumption Fee - The fee paid to a lender (usually by the buyer) for the
lender's agreement to start collecting payment from the buyer instead of the
original borrower (seller).
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