The Glossary Mortgage Terminology

Del Financial's Glossary consists of the more commonly used definitions, meanings, and descriptions used within the mortgage and real estate industry. As always, if you have any questions, please call us at (800) 469-5861.

a credit rating where the FICO score is 660 or above. There have been no late mortgage payments within a 12-month period. This is the best credit rating to have when entering into a new loan.
the right of the lender to demand payment on the outstanding balance of a loan.
the written approval of the buyer's offer by the seller.
Additional Principal Payment
money paid to the lender in addition to the established payment amount used directly against the loan principal to shorten the length of the loan.
Adjustable-Rate Mortgage (ARM)
a mortgage loan subject to changes in interest rates (i.e. a mortgage loan that does not have a fixed interest rate.); when rates change, ARM monthly payments increase or decrease at intervals determined by the lender according to the index rate and margin; the change in monthly payment amount, however, is usually subject to a cap.
Adjustment Date
the actual date (or dates) that the interest rate is changed (i.e. adjusts up or down) for an ARM.
Adjustment Index
the published market index used to calculate the interest rate of an ARM at the time of origination or adjustment.
a signed, sworn statement made by the buyer or seller regarding the truth of information provided.
a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, woods, water) or man-made (like a swimming pool or garden).
a payment plan that enables you to reduce your debt gradually through monthly payments. The payments may be principal and interest, or interest-only. The monthly amount is based on the schedule for the entire term or length of the loan.
Annual Mortgagor Statement
yearly statement to borrowers detailing the remaining principal and amounts paid for taxes and interest.
Annual Percentage Rate (APR)
a measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans. APR is a higher rate than the simple interest of the mortgage.
the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.
a document from a professional that gives an estimate of a property's fair market value based on the sales of comparable homes in the area and the features of a property; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.
Appraisal Fee
fee charged by an appraiser to estimate the market value of a property.
Appraised Value
an estimation of the current market value of a property
a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.
an increase in property value.
a legal method of resolving a dispute without going to court.
As-is Condition
the purchase or sale of a property in its existing condition without repairs.
Asking Price
a seller's stated price for a property.
Assessed Value
the value that a public official has placed on any asset (used to determine taxes).
the method of placing value on an asset for taxation purposes.
a government official who is responsible for determining the value of a property for the purpose of taxation.
any item with measurable monetary value.
Assumable Mortgage
when a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. An assumable mortgage can help you attract buyers if you sell your home.
Assumption Clause
a provision in the terms of a loan that allows the buyer to take legal responsibility for the mortgage from the seller.
Automated Underwriting
loan processing completed through a computer-based system that evaluates past credit history and other information on the application (e.g. employment history, assets, etc.) to determine if a loan should be approved. This system removes the possibility of personal bias against the buyer.
Average Price
determining the cost of a home by totaling the cost of all houses sold in one area and dividing by the number of homes sold.
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