| Term |
Definition |
| 1 year adjustable (ARM)
|
A loan with a fixed rate
for the first 1 year that has a rate that changes once each year for
the remaining life of the loan. Because the interest rate can change
after the first 1 year, the monthly payment may also change. |
| 10 year adjustable
(ARM) |
A loan with a fixed rate
for the first 10 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 10 years, the monthly payment may also
change. |
| 2 year adjustable (ARM)
|
A loan with a fixed rate
for the first 2 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 2 years, the monthly payment may also change.
|
| 3 year adjustable (ARM)
|
A loan with a fixed rate
for the first 3 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 3 years, the monthly payment may also change.
|
| 5 year adjustable (ARM)
|
A loan with a fixed rate
for the first 5 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 5 years, the monthly payment may also change.
|
| 7 year adjustable (ARM)
|
A loan with a fixed rate
for the first 7 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 7 years, the monthly payment may also change.
|
| Abstract (of Title) |
A summary of the public
records relating to the title to a particular piece of land. If
there are any title defects they must be cleared before a buyer can
purchase clear, marketable, and insurable title. |
| Acceleration Clause |
Allows the lender to speed
up the rate at which your loan comes due or even to demand immediate
payment of the entire balance of the loan should you default on you
loan. |
| Adjustable Rate
Mortgage (ARM) |
A mortgage in which the
interest rate is adjusted periodically based on an index. Also known
as the renegotiable 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, usually one, three or five years. |
| Agreement of Sale |
Known by various names,
such as contract of purchase, purchase agreement, or sales agreement
according to location or jurisdiction. A contract in which a seller
agrees to sell and a buyer agrees to buy, under specific terms
spelled out in writing and signed by both parties. |
| Amortization |
The gradual reduction of a
debt by periodic payments of interest and principal that are large
enough to pay off a loan at maturity. The loan is repaid through
regular, monthly payments of principal and interest paid for a
predetermined amount of time. |
| Annual Fee |
A credit card issuer may
charge you a fee each year for your account. |
| Annual Percentage Rate
(APR) |
The annual cost of a loan
to a borrower. Like an interest rate, the APR is expressed as a
percentage of the loan amount. Unlike an interest rate, however, it
includes other charges or fees to reflect the total cost of the
loan. The Federal Truth in Lending Act requires that every consumer
loan agreement disclose the APR in large, bold print. Since all
lenders must follow the same rules to ensure the accuracy of the
APR, borrowers can use the APR as a good basis for comparing the
cost of loans. |
| Appraisal |
A written analysis of the
estimated value of a property, as prepared by a qualified appraiser.
A fee is typically charged for a real estate appraisal because a
home appraisal is time-consuming. An appraisal of an auto is usually
not necessary because auto dealers, sellers and buyers all have
quick access to the market value of autos. |
| Appraisal Fee |
The charge for estimating
the value of property. |
| Asset |
Anything that has monetary
or exchange value that is owned by an individual, business or
institution. Assets include real estate property, personal property,
vehicles and enforceable claims against others (including bank
accounts, stocks, mutual funds, and so on). A lender is very
interested in the amount and value of any assets you may have
because assets can be used as collateral against a loan. Along with
other factors such a a borrower's credit rating, assets are also
used to help determine the amount of the loan. |
| Assumption |
The agreement between buyer
and seller where the buyer takes over the payments on an existing
mortgage from the seller. Assuming a loan can usually save the buyer
money since this is an existing mortgage debt. |
| Automated Teller
Machines (ATMs) |
Electronic terminals
through which customers may make deposits, withdrawals, or other
transactions as they would through a bank teller.
|
