Mortgage Glossary | Amortization | | Regularly scheduled installment payments calculated to pay off your debt by a specific date. Amortization affects housing expense budgets more than anything else, so it pays to make certain your payments are calculated correctly and your payment obligations can be met. | | | | Appraisal | | A survey of a property completed by a professional appraiser to determine the estimated value of the property. | | | | Approval | | Conditional loan approval is based on information provided to the mortgage lender verbally and as set forth on the application. The conditional approval is subject to the verification and/or receipt of additional information. Once all closing conditions and lender requirements are satisfied, the loan will receive final approval. | | | | APR (Annual Percentage Rate) | | The annual percentage rate is a measure of the cost of credit on a yearly basis. The APR allows you to compare various kinds of mortgages based on the yearly cost of each loan. | | | | ARM (Adjustable Rate Mortgage) | | A mortgage that has an initial rate that adjusts periodically, in accordance with a current interest rate index (a predetermined margin is added to the index to compute the interest rate). Payments can be low if interest rates are low and will increase as rates rise. CAPS govern the limit an ARM loan's rate can adjust to at one time and over the life of the loan. Generally, ARMs have lower rates than fixed-rate mortgages and are easier to qualify for - but because they're based on changing interest rates, your payment amounts can be unpredictable. ARM types include Two-Step and Convertible ARM. | | | | Arm's-Length Transaction | | A transaction negotiated by unrelated parties, each acting in his/her own best interest. |
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