Have you ever bought a home before? If you haven't, you should know that it can be QUITE the process. It's important that you understand what you're getting into BEFORE you dive in. That's what our mortgage lenders at the Lake of the Ozarks are here for. Keep reading this week's blog to learn what some of these commonly used mortgage terms actually mean. If you end up having any questions, please give us a call today. First Bank of the Lake can be reached at (573) 348-2265.
Common Mortgage Terms to Know: Part 1
Abstract of Title
A written history of ownership to a specific area of land. An abstract of title covers the period from the original source of title to the present time and summarizes all subsequent documents that have been recorded against that area.
Addendum
An agreement or list that is added to a contract, agreement, or other documents such as a letter of intent.
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically according to a pre-selected index.
Adjusted Gross Income
A person's total income, as reported on his or her IRS 1040 tax return form, after allowable contributions, deductions and expenses (alimony).
Adjustment Period
The period that elapses between the adjustment dates for an adjustable rate mortgage (ARM).
Alimony
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse.
American Land Title Association (ALTA)
A national association of title insurance companies, abstractors, and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms.
Amortization
Payment of a debt in regular, periodic installments of principal and interest as opposed to interest only payments.
Amortization Schedule
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.An agreement or list that is added to a contract, agreement, or other document such as a letter of intent. A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Annual Percentage Rate (APR)
A term used in the Truth-in-Lending Act to represent the percentage relationship of the total finance charge to the amount of the loan. The APR reflects the cost of your mortgage loan as a yearly rate. It will be higher than the interest rate stated on the note because it includes, in addition to the interest rate, loan discount points, fees, and mortgage insurance.
Applicant
A prospective borrower who has completed an application. An application is series of steps, usually including the completion of documents, a lender requires of those seeking a loan.
Application
A printed form used by a mortgage lender to record necessary information concerning a prospective mortgage.
Application Fee
A sum of money paid towards estimated initial mortgage processing expenses such as appraisal and credit report.
Appraisal
A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
Appraised Value
An opinion of value reached by an appraiser based upon knowledge, experience, and a study of pertinent data.
Appraiser
A person qualified by education, training and experience to estimate the value of real and personal property.
Appreciation
An increase in the value of property due to either a positive improvement of the area or the elimination of negative factors. Commonly, and incorrectly, used to describe an increase in value through inflation.
Arm's-Length Transaction
Legal slang meaning that there existed no special relationship between the parties involved in any matter which would taint the result.
Assessed Valuation
The value that a taxing authority places on real or personal property for the purpose of taxation.
Assessment
A charge against a property for purpose of taxation. This may take the form of a levy for a special purpose or a tax in which the property owner pays a share of the cost of community improvements according to the valuation of his or her property.
Assumable Mortgage
A mortgage that can be taken over (assumed) by the buyer when a home is sold.
Are You Unsure About Something Regarding The Mortgage Process?
If so, we are here to help. First Bank of the Lake would be happy to answer any questions you may have. Our phone number is listed below. You can also follow us on our social media channels listed below to stay up to date on our latest announcements.
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