Real Estate Terms
Accelerated Depreciation: A bookkeeping method that depreciates property faster in the early years of ownership. Acceleration Clause: A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender. Acceptance: The seller’s written approval of a buyer’s offer. Acre: A measurement of land equal to 43,500 square feet. Add-On Interest: The interest a borrower pays on the principal for the length of the loan. Adjustable-Rate Mortgage (ARM): A loan with an interest rate that is periodically adjusted to reflect changes in a specified financial index. Adjustment Date: The date on which the interest rate changes for an adjustable-rate mortgage (ARM). Adjustment Period: The time between interest rate adjustments on an adjustable-rate mortgage. Agency: The relationship that exists between sellers and buyers and their agents formed as a result of a written contract. Agreement Of Sale: The document initiated by a buyer for the seller to approve outlining the details of price and terms of the transaction. American Society Of Home Inspectors (ASHI): Professional association of independent home inspectors whose members. Americans With Disabilities Act: A law that outlaws discrimination against a person with a disability in housing, public accommodations, employment, government services, transportation, and telecommunications. Amortization: The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time. Amortization Schedule: A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero. Amortization Term: The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months. Annual Percentage Rate (APR): This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual not rate on your loan. Annuity: A payment of a fixed amount to an investor at regularly established intervals. Application: The form used to apply for a mortgage loan, containing information about a borrowerâ€™s income, savings, assets, debts, and more. Appraisal: A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. Appraised Value: An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price. Read the Next page.