Abstract of Title

Documents recording the ownership of property throughout time.

Adjustable-Rate Mortgage (ARM)

A mortgage loan that does not have a fixed interest rate. during the life of the loan the interest rate will change based on the index rate. also referred to as adjustable mortgage loans (amls) or variable-rate mortgages (vrms).

Adjustment Index

The published market index used to calculate the interest rate of an arm at the time of origination or adjustment.

Adjustment Interval

The time between the interest rate change and the monthly payment for an arm. the interval is usually every one, three or five years depending on the index.


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 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.

Application Fee

A fee charged by lenders to process a loan application.


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.


Adjustable rate mortgage; a mortgage loan subject to changes in interest rates; when rates change, arm monthly payments increase or decrease at intervals determined by the lender; the change in monthly payment amount, however, is usually subject to a cap.

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).


Any item with measurable 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 to determine if a loan should be approved. this system removes the possibility of personal bias against the buyer.