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Mortgage Terms Defined

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  • ARM
    (See Adjustable Rate Mortgage)
  • ARM Assumability
    e ARM loans include a “assumability” feature that allows a qualified applicant to assume the loan. The assumability of an ARM loan might make a property attractive to a borrower who envisions selling their home at a later date. By incorporating an assumable mortgage product, they may be able(...)
  • ARM Disclosure
    An additional disclosure specific to adjustable-rate mortgages that must be prepared and presented to the consumer within three business days of application whenever an adjustable –rate mortgage transaction is contemplated. (Home equity lines have their own unique disclosure.)
  • ARM Handbook
    The Consumer Handbook to Adjustable-Rate Mortgages aka the “CHARM Booklet” must be presented to the applicant within three days of application with the ARM disclosure.
  • Assessment
    A local tax levied against properties that have benefited from civil improvements such as road or sidewalk construction, a sewer, or streetlights.
  • Asset
    Anything owned of monetary value including real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, etc.).
  • Assignment
    The transfer of a mortgage from one person to another.
  • Assumability
    An assumable mortgage can be transferred from the seller to the new buyer. Generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a due-on-sale clause, it may not be assumed by a new buyer.
  • Assumption
    An agreement between the buyer and the seller for the buyer to take over the payments on an existing mortgage.
  • Assumption Fee
    The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.
  • Balance Sheet
    A financial statement that shows assets, liabilities, and net worth as of a specific date.
  • Balloon Mortgage
    A mortgage with level monthly payments that amortizes over a stated term but also requires that a lump sum payment be paid at the end of an earlier specified term.
  • Balloon Payment
    The final lump sum paid at the maturity date of a balloon mortgage.
  • Bank Check
    See Cashier's Check.
  • Bankruptcy
    Proclamation by a court of an individual’s (or organization’s) state of insolvency, or inability, to pay debts. Petition may be brought by an individual or his creditors, with the goal of orderly and equitable settlement of obligations.
  • Basis Points
    A unit of measure: 1/100th of one percent.
  • Bearer
    The legal owner of a property.
  • Before-tax Income
    Income before taxes are deducted.
  • Bequest
    A gift of personal property by will.
  • Bill of Sale
    A document that transfers ownership of goods from one person to another.
  • Biweekly Payment Mortgage
    A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment required if the loan were a standard 30-year fixed-rate mortgage. The result for the borrower is a(...)
  • Bona Fide
    In good faith.
  • Bond
    A document representing a right to certain payments on underlying collateral.
  • Borrower (Mortgagor)
    An individual who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.
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