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Amortization Term (period)

The amount of time it takes to pay off the loan. The amortization term is expressed as a number of months. For example, for a 30 year fixed rate loan, the amortization term is 360 months.

Amortize

To repay a loan with regular payments that cover both principal and interest.

Annual Percentage Rate

The annual percentage rate refers to the total cost of the loan, expressed as a yearly rate.

Application (or 1003)

A form to be completed by a home loan applicant with the lender's assistance to provide pertinent information about a prospective borrower's employment, income, assets, debts and other financial information, about the purpose of the home loan, and about the property securing the home loan. Lenders also sometimes call it a 1003-the form number of Fannie Mae's standard application form.

Application Fee

That part of the closing costs pre-paid to the lender at time of application to cover initial expenses.

Appraisal

A report made by a qualified person as to the value of a property as of a given date.

Appraised Value

The dollar figure for a property's estimated fair market value, based on an appraiser's knowledge, experience, and analysis of the property and comparable properties near by.

Appraiser

A person qualified by education, training, and experience to estimate the value of real property.

Appreciation

An increase in the value of a property due to changes in market conditions or other causes. Inflation, increased demand, home improvement, and sweat equity are all causes of appreciation. The opposite of depreciation.

APR

The annual percentage rate refers to the total cost of the loan, expressed as a yearly rate.

ARM

A mortgage in which the interest rate is adjusted periodically, based on the movement of a financial index.

Assessed Value

The value placed on a piece of real estate by the taxing authority for the purpose of taxation. Also called an assessment.

Assessment

The amount of tax due to local government. May also refer to the amount due to local government or to common owners of a property (e.g., a homeowner's association) for a special payment to cover expenses for improvements or maintenance, such as new sewers or roads.

Assessment rolls

A public record of the assessed value of property in the taxing jurisdiction.

Assessor

A public official who establishes the value of a property for taxation purposes.

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).

Assumable Loan

A home loan that allows a new purchaser of the home to take over ("assume") the loan obligations of the seller when a home is sold.

Assumption of Mortgage

The purchaser takes over mortgage payments for the balance of the loan, assuming primary liability. Unless specifically released by the lender, the seller remains secondarily liable.

Balance sheet

A financial statement that shows an individual's assets, liabilities, and net worth as of a specific date.

Balloon Mortgage

A mortgage with periodic payments that do not fully amortize the loan. The outstanding balance of the mortgage is due in a lump sum at the end of the term.

Balloon Note

A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.

Balloon Payment

The final lump sum payment that is made at the end of the shorter term for a balloon loan and pays the loan in full.

Bankrupt

A person, firm, or corporation that is financially unable to pay debts when due. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee.

Bankruptcy

A proceeding in a federal court in which a debtor who is financially unable to pay debts when due seeks relief to work out a payment schedule or erase debts. bill of sale A written document that transfers title to personal property from seller to buyer.

Blanket Mortgage

A mortgage which covers two or more pieces of real estate. The real estate is held as collateral on the mortgage, but the individual pieces of the real estate may be sold without retiring the entire mortgage.

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