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Adjustable Rate Mortgage (ARM)
interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index.
Amortization
a method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, the principal repayment is very low, while the interest payment is very high. At the end of the loan, the relationship is reversed.
Annual Percentage Rate
the actual finance charge for a loan, including points and fees, in addition to the stated interest rate.
Appraisal
an expert opinion of the value or worth of a property.
Assessed Value
the value placed on property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value.
Balloon Payment
a large principal payment due all at once at the end of some loan terms.
Cap
a limit on how much the interest rate can change in an adjustable rate mortgage.
Certificate of Title
a document, signed by a title examiner, stating that a seller to buyer and documents are recorded.
Closing
the deed to property is legally transferred from seller to buyer and documents are recorded.
Closing Costs
see "Settlement" or refer to "Settlement - who pays what?" in this guide.
Commission
a fee (usually a percentage of the total transaction) paid to an agent or broker for services performed.
Comparative Market Analysis (CMA)
a survey of attributes and selling process of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller's property.
Contingency
a condition in a contract that must be met for the contract to be binding.
Contract
a binding legal agreement between two or more parties that outlines the conditions for the exchange of value (for example:money exchanged for title to property).
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