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.
Additional Principal Payment – A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount due.
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).
Adjusted Basis – The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjustment Date – The date that the interest rate changes on an adjustable-rate mortgage (ARM).
Adjustment Period – The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).
Affordability Analysis – An analysis of a buyer’s 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.
Amortization – The gradual repayment of a mortgage loan, both principal and interest, by installments.
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.
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.).
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.