ACTUAL CASH VALUE – An amount equal to the replacement value of damaged property minus depreciation.
ADJUSTABLE RATE MORTGAGE (ARM) – Also known as a variable rate loan, an ARM usually offers a lower initial rate than a fixed rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market. Indexes used for ARMs include the LIBOR index and the Treasury index. ARMs also have caps or a maximum and minimum that the interest rate can change at each adjustment period.
ADJUSTMENT PERIOD – The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.
AMORTIZE – Paying off a debt by making regular installment payments over a set period of time, at the end of which the loan balance is zero.
AMORTIZATION SCHEDULE – Provided by mortgage lenders, the schedule shows how, over the term of your mortgage, the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases.
ANNUAL PERCENTAGE RATE (APR) – How much a loan costs annually. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.
APPRAISAL – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.
APPRECIATION – An increase in the market value of a home due to changing market conditions and/or home improvements.
ASSETS – Everything of value an individual owns.
ASSUMPTION – A home buyer’s agreement to take on the primary responsibility for paying an existing mortgage from a home seller.