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Mortgage Glossary
Affordability - This is an estimate as to how much a person can afford in order to purchase a home. Affordability gives the consumer a possible price that they could be approved for and pay for a house, and the mortgage required to pay that amount.
Agency Disclosure - Most states require that an agent discloses which side they are working for in the real estate process. Either a buyers' agent, meaning the agent is working in the interest of the buyer, or the sellers' agent where the agent is solely working in the interest of the seller.
Amortization - The process of repayment of a loan with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time, the loan balance declines by the amount of the scheduled payment, plus the amount of any extra payment. The scheduled payment less the interest equals amortization.
Amount Finance - This figure is used to calculate your APR. It represents your loan amount minus any prepaid finance charges and assumes you will keep the loan to maturity and make only the required monthly payments.
Annual Percentage Rate - There are two interest rates applied to your loan: the Actual Interest Rate and the Annual Percentage Rate. The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the "note rate"), and is the rate used to calculate your monthly payments. The amount of interest you pay, as determined by your Actual Rate, is only one of the costs associated with your loan; there may be others. The Annual Percentage Rate (APR) includes both your interest and any additional costs or prepaid finance charges you might pay such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.
Application Fee - Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges. The fee is usually $0 - $500. and is typically applied towards your closing costs.
Appraisal - An appraisal is a written analysis of the estimated value of your property. A qualified appraiser who has knowledge, experience and insight into the marketplace prepares the document. It demonstrates approximate fair market value based on recent sales in your neighborhood and is required to purchase or refinance your new home or 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 - A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific date. This fee is paid to the outside appraisal company to objectively determine the fair market value of your property. This fee varies based on the location and type of your property. Typically $225 - $450
Assignment - The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.
Assignment Recording Fee - In many instances, after closing the lender transfers your loan to a specialized loan "servicer" who handles the collection of your monthly payments. The Assignment Fee covers the cost of recording this transfer at the local recording office.
Assumption - A method of selling real estate where the buyer of the property agrees to become responsible for the repayment of an existing loan on the property.
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