Mortgage Terms - A

ABANDONMENT: The act of giving up one's property voluntarily without intending to reclaim it.

ABSOLUTE AUCTION: It is a type of auction where a property is sold to the bidder offering the highest price without considering the winning bid.

ABSORPTION RATE: It is a rate that gives us an idea of the number of properties bought and sold in a specified market.

ACCELERATION CLAUSE: It is a clause in a promissory note that gives the lender right to demand the outstanding balance of loan. It is applied when the borrower defaults on the loan or has transferred the title without informing the lender.

ACCRUED INTEREST: It is the interest on loan which adds up and can be paid later in installments rather than paying from the time the loan is originated.

ADDITIONAL PRINCIPAL AMOUNT: It is an extra payment made by the borrower towards original loan amount. Thereby it can reduce the outstanding loan balance and help him to pay off the loan in a short period of time.

ADJUSTABLE RATE MORTGAGE: It is a home loan program in which the interest rate and the monthly payment are adjusted at regular intervals according to the current financial market condition.

ADJUSTED BOOK BASIS: It is the price of the property in which the original cost of the property is added to all capital expenditures like legal fees etc.

ADJUSTMENT DATE: It is the date on which the interest rate of ARM changes at regular intervals.

ADJUSTMENT PERIOD: It is time period during which the interest rate of Adjustable Rate Mortgage is adjusted.

ALLIANCE MORTGAGE: It is the agreement between the lender and the borrower by which the later is permitted to retain the property.

ALTERNATIVE MORTGAGE: It is a home loan that conforms to one-time adjustment rate, usually after every seven years.

AMORTIZATION: It is a loan re-payment plan on an installment basis for a period of time.

AMORTIZATION TERM: It is the total time required to completely pay off the loan.

AMORTIZATION SCHEDULE: It is the table that shows the payments towards the principal and interest as well as the outstanding balance over the life of the loan.

ANNUAL PERCENTAGE RATE: It is the rate of interest on a yearly basis which includes charges on the loan and the interest payment.

ANNUAL MORTGAGOR STATEMENT: It is a statement sent to a borrower at the end of each year of the loan period. It includes all the information of the loan payment throughout the year.

ANNUITY: It is a legal contract sold by the insurance company to provide an income to a person after retirement for a period of time in his lifespan. It is like a pension scheme.

APPRAISAL FEE: It is a fee charged by the appraiser who estimates the total value of the property held as security for a loan.

ASSUMPTION: It is a transaction by which a buyer bears the responsibility of an existing mortgage. It allows him to save money as he can avoid the closing cost on a new mortgage.

ASSUMABLE MORTGAGE: It is a mortgage that can be taken over by a home buyer after which the seller is no longer responsible for repaying it.

ATTORNEY WITNESS FEE: The attorney is required to be present at the time of closing of a loan. He acts as a witness to signing the legal papers and charges a fee for that.