Financial Terms

An attorney or title insurance company examines an abstract of title for any title defects that must be cleared before a buyer can purchase a clear, marketable, and insurable title.

Condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if regular mortgage payments are not made, or for breach of other conditions of the mortgage.

Interest earned but not yet paid.

A loan in which the interest rate is periodically adjusted, moving higher or lower in the same ratio as a preselected index such as Treasury bill rates. ARM loans may include caps on interest rate increases in a given time period, and over the life of the loan, and may include limits on the frequency of interest rate adjustments. ARM loans generally have initial below market interest rates in return for the borrower sharing the risk that interest rates may rise during the life of the loan.

Current balance plus any unused portion of an overdraft protection account (if you have one), minus any holds on the account.

This is the length of time between rate adjustments on an Adjustable-Rate Mortgage (ARM).

Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

A method of documenting a loan file that relies on information the borrower is likely to be able to provide instead of waiting on verification sent to third parties for confirmation of statements made in the application.

The repayment of a loan calculated so that the principal will be paid in full through monthly payments of principal and interest for a predetermined period. Many home mortgages are fully amortized in 15, 20 or 30 years.

A monthly repayment schedule outlining how a loan will be paid off in fixed payments combining principal and interest.

The rate required by Truth in Lending laws. It is designed to show customers the total cost of credit, including the stated interest rate plus certain finance and service charges.

An initial statement of personal and financial information required to approve your loan.

Fees charged by lender to cover initial costs of processing a loan application, often including charges for property appraisal and a credit report.

This is an estimate of the market value of a piece of property by a qualified appraiser.

A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific date.

This is the increase in value of an item, specifically the increase in market value of real estate.

A local tax levied against a property for a specific purpose, such as road or sidewalk construction, a sewer, or streetlights.

Anything owned by an individual or company that has commercial usefulness or value if sold. An asset may be physical property or items, or enforceable claims against others. Loans made by a financial institution are assets of that institution. Assets also include real estate, equipment, cash, investments in stocks and bonds, and any other resource that can be converted into cash.

The transfer of property rights by one person to another, or the assignor, to the assignee.

A feature of a loan that allows it to be transferred to the new purchaser of a home. Assumable mortgages can help attract buyers since assumption of a loan requires lower fees and/or qualifying standards than a new loan.

A home loan that can be transferred to another borrower.

This is an agreement between buyer and seller for the buyer to take over the payments on an existing mortgage.

A person appointed by the owner of an account to draw, sign and deliver checks, drafts, bills of exchange or other orders for the payment of money, including checks payable to the authorized signer’s order and to endorse checks, drafts or other instruments owned by the owner.

A computer-based clearing and settlement facility established to process the exchange of electronic transactions between participating depository institutions. Such electronic transactions take the place of paper checks.

A machine that permits customers to gain access to their accounts through the use of a magnetically encoded plastic card and by pushing appropriate buttons on a computer terminal. ATMs are available 24 hours a day and dispense cash, transfer funds from one account to another, and perform other functions.

Current balance plus any unused portion of an overdraft protection account (if you have one), minus any holds on the account.