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Mortgage Terms - A

A summary; an abridgment. Before the use of photostatic copying public records were kept by abstracts of recorded documents.
Abstract of Title
A compilation of the recorded documents relating to a parcel of land, from which an attorney may give an opinion as to the condition of title. Still in use in some states, but giving way to the use of title insurance.
A measure of land equal to 43,560 square feet.
Formal declaration before a public official that one has signed a document. Prior to recording real estate legal documents such as grant deeds and deeds of trust, a Notary Public acknowledges the person's signature on the document.
Action to Quiet Title
A court action to establish ownership to real property. Although technically not an action to remove a cloud on a title, the two actions are usually referred to as "Quiet Title" actions.
Adjustable Rate Mortgage (ARM)
A mortgage where the interest rate is not fixed for the life of the loan. These mortgages adjust periodically based on an index that changes with market conditions. The rate of interest is the sum of the index plus a margin ( the margin remains fixed for the life of the loan). Most ARMs have periodic interest rate and payment caps as well as life cap. ARM's may also be referred to as AML's or VRM's.
Person authorized to act on behalf of another in dealings with third parties.
Agreement of Sale
An agreement between parties for the sale of real estate. In some states it is synonymous with a Purchase Agreement or Land Contract. In Texas it is known as an Earnest Money Contract.
Alienation Clause
Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred, sometimes contingent upon other occurrences such as transfer of ownership of secured property.
American Land Title Association
Title policy that assures lenders have the proper rights as the beneficiary on a mortgage loan.
Gradual payment of a debt through regular installments that cover both interest and principal.
Annual Percentage Rate(APR)
A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.
Appraisal and Credit Report Fees
These fees are generally collected by the lender and paid to outside companies performing the services.
Appraised Value
An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.
Appraisal Report
Estimate of real estate value, presumably by an expert. An appraisal evaluates the property at a given time based on facts regarding the location, improvements, neighborhood, and comparable sales. Generally, the value is based on three approaches: cost, market, and income.
Increase in value or worth of property.
Payment made after its due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.
"as is"
A clause that is used sometimes in the transfer of property. It means that the present property is being transferred with no guarantee or warranty provided by the seller.
Assessment Base
The total assessed value of all property in a given assessment district.
"Assessed Valuation"
Value placed on property as a basis for levying property taxes; not identical with appraised or market value.
Transfer of a contract from one party to another.
When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to the new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. Assumability can help you attract buyers if you sell your home.
New owner takes over the responsibility of repaying an existing mortgage. Both FHA and VA loans are fully assumable. Some adjustable rate mortgages may be partially assumable, but the new owners may be required to re-qualify for the loan.
Assumption of Mortgage
Agreement by a buyer to assume the liability under an existing note secured by a mortgage or deed of trust.
Attached Home
A home that has one or more common walls adjoining another home. Condominiums and row houses are attached homes.