Glossary

Acceptance: A positive response to an offer or counteroffer. An acceptance may be "conditional," "express," "implied" or "qualified."

Adjustable-rate mortgage (ARM) A mortgage whose interest rate changes periodically based on the changes in a specified index. 3/1, 5/1, 7/1 and 10/1 are ARMs in which rate is fixed for three-year, five-year, seven-year and 10-year periods, respectively, but may adjust annually after that.

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 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

Adjustment Period The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).

Adjustment date The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment period The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

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.

Agent: Someone who acts on behalf of another for a fee, such as a real estate agent.

Amortization The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.

Amortization term The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

Annual percentage rate (APR) The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

Application A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.

Appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appraised Value An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.

Appraiser A person familiar with local real estate values, qualified by education, training, and experience to estimate the value of real property and personal property.

Appreciation An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

"As-is" agreement: Certifies that a buyer accepts whatever physical condition a property is in at the time the contract is signed. May be controlled by state and local regulations.

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

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).

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.

Assumable mortgage A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

Assumption: When a buyer assumes the loan payments and obligations of the seller. If the purchaser defaults, however, both the buyer and seller are responsible for the debt.

Assumption clause A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.

Assumption fee The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

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