Acceleration Clause
A clause in a mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reason for accelerating a loan is if the borrower defaults on the loan or transfers title to another individual without informing the lender.

Adjustable Rate Mortgage (ARM)
A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.

Adjustment Date
The date the interest rate changes on an adjustable-rate mortgage.

Amortization
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

Annual Percentage Rate (APR)
This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual note rate on your loan.

Appraisal
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby. The appraisal will contain the appraised value. (Not to be confused with an assesment or CMA.)

Appraiser
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

Appreciation
The increase in the value of a property due to changes in market conditions, inflation, or other causes.

Assessment
The placing of a value on property for the purpose of taxation. The assessment will contain the assessed value. (Not to be confused with an appraisal or CMA.)

Assessor
A public official who establishes the value of a property for taxation purposes.

Asset
Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.” These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.

Assignment
When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

Assumable Mortgage
A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan.