Mortgage Glossary
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Adjustable Rate
An interest rate that changes periodically
in relation to an index. Payments may increase
or decrease accordingly.
Amortization
A repayment method in which the amount you
borrow is repaid gradually through 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 Membership
An amount that may be charged annually for
having a line of credit available. Often
charged regardless of whether you use the
line. Also referred to as a "participation
fee."
Annual Percentage
Rate (APR)
The cost of credit on a yearly basis, expressed
as a percentage. Required to be disclosed
by the lender under the federal Truth in
Lending Act, Regulation Z. Includes up-front
costs paid to obtain the loan, and is, therefore,
usually a higher amount than the interest
rate stipulated in the mortgage note. Does
not include title insurance, appraisal and
credit report.
Application
An initial statement of personal and financial
information which is required to approve
your loan.
Application
Fee
Fees that are paid upon application. An
application fee frequently includes charges
for property appraisal ($200-$400) and a
credit report ($30-$50).
Appraisal
A fee charged by an appraiser to render
an opinion of market value as of a specific
date. Required by most lenders to obtain
a loan.
Assumption of
Mortgage
The agreement of a purchaser to become primarily
liable for the payments on a mortgage loan.
Unless otherwise specified by the lender,
the seller may remain secondarily liable
for payments.
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