- adjustable-rate mortgage (ARM)
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A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
- adjustment date
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The date the interest rate changes on an adjustable-rate mortgage
- amortization
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a repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.
- annual percentage rate (APR)
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The cost of credit on a yearly basis, expressed as a percentage.
- application
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The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more.
- appraisal
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an estimate of a property's current market value, prepared by an appraiser.
- appraiser
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An individual qualified by education, training, and experience to estimate the value of real property and personal property.
- appreciation
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The increase in the value of a property due to changes in market conditions, inflation, or other factors.
- assessed value
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The valuation placed on property by a public tax assessor for purposes of taxation.
- assessment
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The placing of a value on property for the purpose of taxation.
- asset
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Items of value owned by an individual. Can include personal property, real estate and debts owed to an individual by others. Assets that can quickly be converted to cash are referred to as "liquid assets" such as bank accounts, stocks, bonds, etc.
- assignment
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The transfer of ownership of your mortgage from one company or individual to another.
- assumable mortgage
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A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.
- balloon mortgage
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A short-term mortgage in which small periodic payments are made until the completion of the term, at which time the balance is due as a single lump-sum payment. On a 7-year balloon loan, for example, the payment is usually calculated over a 30-year period, and the balance at the end of the 7th year must be repaid or refinanced at that time.
- balloon payment
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The final lump sum payment that is due at the end of a balloon mortgage.
- bankruptcy
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The condition of being financially insolvent. One who files for bankruptcy is either fully or partially unable to meet his or her financial obligations. The most common type of bankruptcy is a "Chapter 7" which releives the borrower of most types of debts. It can destroy a person's credit.
- bill of sale
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A written document that shows the transfer of personal property from one person to another.
- broker
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One that acts as an agent for others, negotiating contracts, purchases or sales in return for a fee or commission.
- chain of title
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An analysis of the transfers of a property's title over the years.
- clear title
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A title that is free of liens or legal questions as to ownership of the property.
- closing
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On a home purchase, the process of transferring ownership from the seller to the buyer, the disbursement of funds from the buyer and the lender to the seller, and the execution of all the documents associated with the sale and the loan. On a refinance, there is no transfer of ownership, but the closing includes repayment of the old lender.
- closing costs
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Any fees paid by the borrowers or sellers during the closing of the mortgage loan.
- comparable sales
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Recent sales of similar properties in nearby areas which are used to help determine the market value of a property. Sometimes referred to as "comps."
- condominium
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a building where units of the property, such as apartments, are owned by individuals and common parts of the property, such as the grounds and building structure, are owned jointly by the unit owners.
- construction loan
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A short-term loan for financing construction costs. The lender makes payments to the builder at periodic intervals as the work progresses.
- contingency
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A condition that must be met before a contract is legally binding.
- convertible ARM
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An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
- cost of funds index (COFI)
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One of many interest rate indexes used to determine interest rate adjustments on an adjustable rate mortgage.
- deed
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The legal document conveying title to a property.
- deed-in-lieu
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Short for "deed in lieu of foreclosure" this is when a borrower transfers the title of a property over to the lender as an alternative to foreclosure.
- deed of trust / trust deed
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the agreement used to pledge real estate property as security for a loan. Similar to a mortgage; used in many western states.
- depreciation
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A decline in the value of property.
- discount points
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An amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the total loan amount.
- easement
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A right of way giving persons other than the owner access to or over a property.
- effective age
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An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
- Equal Credit Opportunity Act (ECOA)
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A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
- equity
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A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
- escrow
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An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.
- Fair Credit Reporting Act
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A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.
- fair market value
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The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
- Fannie Mae (FNMA)
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The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.
- Federal Housing Administration (FHA)
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An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
- FHA mortgage
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A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
- fixed-rate mortgage
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A mortgage in which the interest rate does not change during the entire term of the loan.
- foreclosure
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The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
- Freddie Mac
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One of two Federal agencies that purchase home loans from lenders. The other is Fannie Mae.
- government loan (mortgage)
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A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.
- Government National Mortgage Association (Ginnie Mae)
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A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans. The difference is that Ginnie Mae provides funds for government loans (FHA and VA).
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