Mortgage terms and definitions for
home buyers, home sellers, and real estate consumers. Use
the links below to find the word you're looking for.
The clause in a mortgage or trust deed that stipulates the
entire debt is due immediately if the mortgagee defaults
under the terms of the contract.
Under an FHA loan, the purchase price or appraised value
of the property plus the estimated closing costs.
Rate Mortgage (ARM) -
A mortgage in which the interest rate is adjusted periodically
based on an index. Also called a variable rate mortgage.
The date the interest rate changes on an ARM (adjustable
For an adjustable rate mortgage, the time between changes
in the interest rate charged. The most common adjustment
intervals are one, three or five years.
book basis -
The purchase price of a property plus any capital improvements
less accrued depreciation, if any, to the date of the sale.
Literally to "kill off" (root: mort) the outstanding balance
of a loan by making equal payments on a regular schedule
(usually monthly). The payments are structured so that the
borrower pays both interest and principal with each equal
Percentage Rate (APR) -
A figure that states the total yearly cost of a mortgage
as expressed by the actual rate of interest paid. The APR
includes the base interest rate, points, and any other add-on
loan fees and costs. As a result the APR is invariably higher
for the rate of interest that the lender quotes for the
mortgage but gives a more accurate picture of the likely
cost of the loan. Keep in mind, however, that most mortgages
are not held for their full 15 or 30 year terms, so the
effective annual percentage rate is higher than the quoted
APR because the points and loan fees are spread out over
A series of income payments of receipts over a period of
A mortgage application requires borrowers to submit information
regarding their income, savings, assets, debts, and more.
Application Fee -
The fee charged by the lender to the borrower for applying
for a loan. Payment of this fee does not guarantee that
a loan will be approved. Some lenders may apply the cost
of the application fee to certain closing costs.
The determination of property value based on recent sales
information of similar properties.
Determining a property's value for the purpose of taxation.
These loans may be passed on from a seller of a home to
the buyer. The buyer "assumes" all outstanding payments.
Buying property and assuming the responsibility of the exiting
Increases in property value due to fluctuations in the market,
inflation, et al.
Valuable items, encumbered or not, owned by a person, corporation,
A mortgage that provides for a buyer to "assume" all outstanding
payments when a home is sold. The buyer usually must meet
qualification standards to assume a loan.