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Glossary of Mortgage Loan Terms
Acceleration ClauseA provision in a mortgage that gives the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed.Adjustable Rate Mortgage (ARM)A mortgage whose interest rate changes over time based on an index and a margin. Rate changes are made at prescribed times and within prescribed limits (caps) as defined in the mortgage contract.Adjustment IntervalOn an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.AmortizationThe gradual repayment of a mortgage by installments.Annual Percentage Rate (A.P.R.)The interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated rate on the mortgage because it takes into account points and other credit costs.AppraisalAn opinion of the market value of a property, made by a qualified "appraiser".AppreciationAn increase in value due to changes in market conditions or other causes.AssumptionThe transfer of the seller's existing mortgage to the buyer.Balloon MortgageUsually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.Buy-DownWhen the ... more

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