Acceleration clause
A provision of a mortgage loan that advances the date of payment under certain circumstances.
Adjustable-rate mortgage (ARM)
A mortgage loan in which the interest changes periodically due to changes in market conditions.
Annual percentage rate (APR)
The annual rate charged for borrowing money (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
Appraisal
A written estimate of value, primarily based on an analysis of comparable home sales.
Appreciation
The increase in the value of a property.
Assessed value
The value placed on property by a public tax assessor for the purposes of taxation.
Assumable mortgage
A mortgage that can be assumed by a qualified buyer when a home is sold.
Balloon mortgage
A mortgage in which periodic payments are made until the completion of the term, at which time the balance is due in full as a single lump-sum payment.
Balloon payment
The final lump sum payment that is due at the end of a balloon mortgage.
Biweekly mortgage
A mortgage where you make payments every two weeks instead of once a month. This results in making 13 payments per year instead of 12. The extra payment reduces the principal amount of the loan substantially and reduces the time it takes to pay off the mortgage.
Bridge loan
A short-term loan that utilizes the equity available in a purchasers existing home. Used as a means to purchase a new home prior to selling an existing home.
Cash-out refinance
When a borrower refinances his existing mortgage at a higher amount than the current loan balance with the intention of obtaining additional money for personal use.
Certificate of Eligibility
A document issued by the Veterans Administration that certifies a veteran’s eligibility for a VA loan.
Closing
In Oregon a real estate transaction is not consided “closed” until the documents record at the local recorders office.
Construction loan
A short-term loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Contingency
A condition that must be met prior to fully executing a purchase and sale agreement.
Conventional mortgage
Refers to non government home loans.
Convertible ARM
An adjustable-rate mortgage that allows the borrower to convert to a fixed-rate mortgage within a specific time.
Deed
The legal document conveying title to a property.
Deed-in-lieu of foreclosure
When a borrower who is in default agrees to give the property back to the lender to avoid foreclosure. The lender may or may not agree to this.
Default
Failure to make a mortgage payment within 30 days of its due date.
Delinquency
Failure to make a mortgage payment by its due date. Even though the lender may not charge a late fee for a number of days, the payment is still late and the loan is considered to be delinquent.
Depreciation
A decline in the value of property.
Discount points
Fees paid to a lender at closing in order to lower the interest rate on a home loan.
Earnest money deposit
Money given by the buyer to the seller to show good faith. If the buyer defaults on the sales contract the buyer forfeits the money.
Easement
A right held by one property owner to use of the land of another property owner for a limited purpose, such as a right of passage.
Effective age
An estimate by an appraiser of the physical condition of a building. The real age of a building may be shorter or longer than its effective age.
Eminent domain
The right of the government to take private property for public use upon payment of its fair market value.
Encroachment
Something that intrudes illegally on another’s property.
Encumbrance
A lien or claim on a property.
Escrow
An item of value deposited with a third party to be delivered upon the fulfillment of a condition.
Executor
a person who executes, carries out, or performs some duty.
Fair market value
The price that a buyer is willing to pay, and a seller is willing to accept under normal circumstances.
FHA mortgage
A government loan that is insured by the Federal Housing Administration (FHA).
Fixed-rate mortgage
A mortgage with a fixed interest rate that does not change during the entire term of the loan.
Fixture
Something that is securely, and usually permanently, attached to a property.
Grantee
The person to whom an interest in real property is conveyed.
Grantor
The person conveying an interest in real property.
Home equity line of credit (HELOC)
A mortgage loan, usually in second position, that allows the borrower to obtain a loan against the equity of his home.
Homeowner’s insurance
A type of insurance that combines personal liability insurance and hazard insurance coverage for a property and its contents.
Judgment
An obligation, most often a debt, arising from a judicial decision.
Jumbo loan
A non-conforming loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits. Each county has different limits that change frequently.
Lease option
A financing option that allows home buyers to lease a home with an option to buy at a specified date.
Lien
A claim against a property to secure a debt.
Loan officer
A person who serves as an intermediary between lending institutions and borrowers. They facilitate the loan process for the buyer.
Loan-to-value (LTV)
The percentage relationship between the amount of the loan and the appraised value or sales price.
Mortgage insurance (MI)
Insurance that protects the lender against some of the losses incurred as a result of a default on a home loan. It is typical on loans that have higher than an 80% loan to value ratio.
Negative amortization
The increase of the principal balance of a loan by the amount in which loan payments fall short of the total interest due. This is usually the result of an increase in the interest rate after the loan has begun.
Notice of default
A written notice from a lender to a borrower that a default has occurred on their loan and legal action may be taken.
Origination fee
A fee for originating a new loan.
Periodic payment cap
On an adjustable rate mortgage this is a limit on the amount that payments can increase or decrease during any one adjustment period.
Prepayment penalty
A fee that may be charged to a borrower who pays off a loan before the end of its term.
Pre-qualification
A written opinion from a lender stating that they believe a potential borrower will be able to qualify for a loan up to a specified amount.
Prime rate
The minimum interest rate charged by a commercial bank on short-term business loans to large, best-rated customers or corporations.
Promissory note
A written promise to repay a specified amount of money at a specified time.
Purchase agreement
A written contract signed by the buyer and seller stating the terms and conditions that a property will be purchased.
Rate lock
A “locking” of an interest rate for a specified period of time at a specific cost.
Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advanced written notice of closing costs.
Settlement statement
A document that provides an itemized listing of the funds that were paid at the closing of a real estate transaction.
Title insurance
A form of insurance that protects the owner or mortgagee of real property from lawsuits or claims arising from a defective title.
Truth-in-Lending
A federal law that requires lenders to fully disclose to borrowers, in writing, the terms and conditions of a mortgage.