Mortgage Basics
- Adjustable Rate Mortgage A mortgage loan was the interest rate adjusts periodically based on the changes of a specified index such as the one-year Treasury Bill or the LIBOR.
- Amortization The calculation of the amount of the installment payment it takes to pay off the obligation at the end of a fixed period of time.
- Annual Percentage Rate (APR) The total cost of a mortgage stated as a yearly rate. It is typically higher than the note rate because it includes the base interest rate plus specific closing costs.
- Appraisal A professional report that estimates the market value of a property.
- Assessed Value The value a tax authority places on real property for the purpose of assessing yearly property taxes.
- Balloon Mortgage A mortgage that is amortized over a stated period but provides for a lump-sum payment due at an earlier period, e.g. 30-year due in 15, where the payments are based on 30-year repayment but the loan is due paid in full in 15 years.
- Cap Limits how much the interest rate on an adjustable rate mortgage (ARM) can increase or decrease.
- Cash to Close Liquid assets available to be used to pay the closing costs involved with a mortgage transaction.
- Collateral Property pledged as security for a loan, such as property pledged as security for a mortgage.
- Conventional Mortgage A mortgage not obtained under a government-insured program.
- Deed A legal document that is recorded in the county conveying title to a property.
- Deed of Trust The legal document that pledges the property for the security of a mortgage loan.
- Default Failure to make mortgage payments in a timely manner or to comply with other requirements outlined in the note.