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Mortgage-Glossary

Mortgage Glossary

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TermDefinition
Line of Credit An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time
2/1 Buy Down Mortgage The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long term rates; however, even keeping the loan in place for three full years or more will keep their average interest rate in line with the original market conditions.
Abstract of title A summary of recorded transactions concerning a particular property
Acceleration Clause Provision in a mortgage that allows the lender to demand payment of the entire principal balance if a monthly payment is missed or some other default occurs.
Accrued Interest Interest earned but not yet paid
Additional Principal Payment A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount due.
Adjustable Rate An interest rate that adjusts periodically according to an index
Adjustable-Rate Mortgage (ARM) A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).
Adjusted Basis The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjustment Date The date that the interest rate changes on an adjustable-rate mortgage (ARM).

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