Vocabulary Flashcards
A type of blended mortgage loan which avoids private mortgage insurance (PMI). It consists of an 80% - 30 year first lien at market rates, a 10% - 15 year second lien at a slightly higher interest rate, and a 10% down payment. Instead of having to come up with a 20% down payment, a buyer is able to avoid PMI with only 10% down. While the interest rate on the second note is a bit higher, the total monthly payment is usually lower than a 90% mortgage with PMI. In addition, the extra interest paid for the second lien is tax deductible, whereas PMI is not. It is also possible to payoff just the second lien, thereby lowering the future monthly payments. Some lenders also offer 75-15-10 and 80-15-5 programs. This type of mortgage also gives the consumer the option of having a non-escrowing loan without a 20% down payment.
80-10-10
A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.
Abstract of Title
The joining, reaching or touching of adjoining land. Abutting pieces of land have a common boundary.
Abutting
A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at one.
Acceleration Clause
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
Acceptance
An addition to land through natural causes.
Accretion
A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by him and that it was his free and voluntary act.
Acknowledgment
A measure of land equal to 43,560 square feet.
Acre
Designates an assessment of taxes against property. Literally, according to value.
Ad Valorem
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Additional Principal Payment
A mortgage loan whose interest rate fluctuates according to the movements of an assigned index or a designated market indicator–such as the weekly average of one-year U.S. Treasury Bills–over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary.
Adjustable Rate Mortgage (ARM)
The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjusted Basis
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Date
The period that elapses between the adjustment dates for an adjustable-rate mortgage.
Adjustment Period
Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.
Adjustments