**We can accept no responsibility as to the accuracy of the definitions below.

Acceleration
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

Adjustable rate mortgage (ARM)
Is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also sometimes known as the re negotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.

Adjustment interval
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.

Amortization Schedule
A loan repayment schedule that shows the principal and interest payment portion of each mortgage payment, and the effect that it has on debt reduction.

Annual percentage rate (A.P.R.)
The true cost of a mortgage, expressed as a yearly % rate. This rate is likely to be higher than the stated note rate, because it takes into account points and other credit costs.

Appraisal
An estimate of the value of property, made by a qualified professional called an "appraiser".

Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller.

Balloon (payment) Mortgage
Usually a short-term fixed-rate loan which involves a set interest rate for a certain period of time (usually 5 or 7 years), and one large payment for the remaining amount of the principal at the conclusion of that time frame (may be able to convert or refinance).

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

Borrower (Mortgagor)
One who applies for and receives a loan in the form of a mortgage, with the intention of repaying the loan in full.

Broker
An individual in the business of assisting in arranging funding or negotiating contracts for a client buyer. Brokers usually charge a fee or receive a commission for their services.

Buy-down
When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.)

Caps (interest)
Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (payment)
Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Closing
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands (also called Settlement).

Closing Costs
Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement.

Commitment
An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork, or compliance with stated conditions.

Construction loan
A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as work progresses.

Contract sale or deed:
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional loan
A mortgage not insured by FHA, or guaranteed by the VA.

Credit Report
A report documenting the credit history and current status of a borrower's credit standing.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income (See housing expenses-to-income ratio).

Deed of trust
In many states, this document is used in place of a mortgage to secure the payment of a note.

Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance (See negative amortization).

Delinquency
Failure to make payments on time. This can lead to foreclosure.

Discount Point
see point

Down Payment
The difference between the purchase price and the mortgage amount (paid by buyer).

Due-on-Sale-Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage, if the mortgage holder sells the home.

Page: [1] 2 3 Next >>