Mortgage glossary

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Abstract Of Title: a public record showing a condensed title history of the property.

Acceleration Clause: a provision which requires that the remaining balance due be paid if the borrower defaults on the loan or transfers title to another party.

Acceptance: after you make an offer on a home and the seller accepts, you sign a purchase agreement that states the purchase price and other terms of the sale is drawn up and earnest money is put on the home.

According to Value: also called 'Ad Valorem' which refers to the value of your home and property that your property taxes are based on.

ACE-Automated Certificate of Eligibility: this system is used by VA approved lenders in order to help veterans get the Certificate of Eligibility they need to take part in the VA Home Loan Guarantee Program.

Acreage: the amount of land that is being purchased as an empty lot or with a home pre-existing on the property. One acre is equal to $43,560 square feet.

Adjustable Rate Mortgage: see ARM.

Adjustment Date: the date that an ARMs interest rate is changed. FFI mortgage glossary.

Advance: the amount you borrow from the lender.

Adverse Credit: the term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJ's.

Alt-A mortgage: generally, a loan that can be underwritten with lower or alternative documentation than a full documentation mortgage loan but may also include other alternative product features. FFI mortgage glossary.

Amenity: a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden).

Amortization: the process of paying off the debt or mortgage, usually by equal monthly payments. Monthly payments are mostly interest at first (because the debt is higher) and almost entirely principal in later years, when the loan balance is small.

Amortization Schedule: a table which shows the distribution of monthly payments - how much will be applied toward principal and how much toward interest over the life of the loan.

Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan. FFI mortgage glossary.

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal: a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraised Value: an opinion of the fair value of a property, generally by a qualified and/or licensed professional an appraise.

Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

Appreciation: the increase in the value of a property over time, usually due to changes in market conditions, inflation or improvements.

APR: see Annual Percentage Rate.

ARM or adjustable rate mortgage: a mortgage loan with an interest rate that adjusts periodically over the life of the mortgage based on changes in a specified index.

Arrangement Fee: the fee you pay your Lender in return for them providing you with a mortgage. Usually paid on completion or with your application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage. FFI mortgage glossary.

Arrears: mortgage payments which have not been paid as requested and have become overdue.

Assessed Value or Assessment: the value a property is given by a tax assessor in order to determine the cost of property taxes for that parcel.

Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation.

Asset: personal and Real property: items of value which can be quickly converted into cash. Bank accounts, stocks, bonds, mutual funds, real estate, personal property, etc.

Assumable mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage. FFI mortgage glossary.

Assumption: when the seller officially transfers their mortgage to the buyer of their property.

Assured tenancy: the landlord can charge a market rent (the current rate for similar property in that area) and take back the property under certain conditions, as set out in the Housing Acts of 1988 and 1996.

AST (Assured Shorthold Tenancy): a form of tenancy that gives the landlord the right to repossess their property after a set amount of time laid out in the tenancy agreement. New tenancies are automatically ASTs unless otherwise stated.