Mortgage Glossary
There are a lot of unfamiliar terms that get tossed around during the mortgage process. But don't worry, we've put together this glossary to help you get a better grasp of any terms that may be less than clear.
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Abandonment
The voluntary surrender of property, owned or leased, without naming a successor as owner or tenant.
Absentee Owner
An owner who does not personally manage or reside at property owned.
Absolute Auction
An auction in which the subject property is sold to the highest bidder regardless of the amount of the winning bid.
Absorption Rate
An estimate of the expected annual sales or new occupancy of a particular type of land use.
Abstract Exam
A fee related to the title insurance required by the lender. A public record search exam is done to insure that both you and the lender are aware of any liens or encumbrances that could affect the property. For our comparison purposes, an abstract exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Acceleration Clause
A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
Acceptance
A party’s consent to enter into a contract and be bound by the terms of the offer.
Accepted Contract
A sales contract signed by both seller and buyer that defines the terms of the sale.
Additional Principal Payment
A payment by a borrower of more than the scheduled principal amount due, in order to reduce the remaining balance of the loan.
Adjustable Rate Mortgage
An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.
Adjusted Basis
The original cost of a property, plus the value of any capital expenditures for improvements to the property, minus any depreciation taken.
Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between the adjustment dates for an adjustable rate mortgage (ARM).
Administrative Fee
A fee charged by a lender to cover the administrative costs of processing your loan request. For our comparison purposes, this fee is typically a lender fee.
Administrator
A person appointed by a probate court to administer the estate of a person who died intestate.