Glossary Adjustable rate mortgage (ARM) - A mortgage with an interest rate that changes over time in line with movements in a financial index.
Adjustment Period - The length of the time between interest rate changes. For example, a loan with an adjustment period of one year is called a one year ARM, meaning that the interest rate can change once a year.
Amortization - Repayment of a loan in installments of principal and interest, rather than interest only payments.
Appraisal - An estimate of the properties value.
Assessed value - The value placed on a property for purposes of taxation.
Assumption of mortgage - A buyers agreement to assume the liability under an existing note that is secured by mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower typically the seller from liability.
Balloon payment - A lump some principal payment due at the end of some mortgages or other long-term loans.
Buy down - A permanent buy-down down is prepaid interest that brings the note rate on the loan down to a lower permanent rate. A temporary buy-down is prepaid interest that lowers the note rate temporarily on the loan, allowing the buyer to more readily qualify and increase payments as income grows. Cap - The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of a mortgage. Cash reserves - The amount of the buyers liquid cash remaining after making the down payment and paying all closing costs. CC&Rs or Covenants, Conditions and Restrictions - A recorded document that controls the use, requirements and restrictions of a property.
Commission - An amount paid by the seller to the listing and buyers agent for handling the real estate transaction.
Commitment period - A period of time during which a loan approval is valid.
Condominium - A form of real estate ownership in which the owner receives exclusive title to a particular unit and shares ownership in certain common areas with other unit owners. The unit itself is generally a separate space whose interior surface serves as its boundaries. Contingency : A condition that must be satisfied before a contract is binding. For example, a sales agreement or offer may be contingent upon the buyer obtaining financing.
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