Glossary

a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p | q | r | s | t | u | v | w | x | y | z

 

A

 

Adjustable Rate
Any interest rate that changes on a periodic basis. The change is usually tied to movement of an outside indicator, such as the prime interest rate. Movement above or below certain levels is often prevented by a predetermined floor and ceiling for a given rate. For example, you might see a rate set at "prime plus 2%". This means that the rate on the loan will always be 2% higher than the prime rate, which changes regularly to take into account changes in the inflation rate. For an individual taking out a loan when rates are low, a fixed rate loan would allow him or her to "lock in" the low rates and not be concerned with fluctuations. On the other hand, if interest rates were historically high at the time of the loan, he or she would benefit from a floating rate loan, because as the prime rate fell to historically normal levels, the rate on the loan would decrease.

 

Adjustable Rate Mortgage
A mortgage loan with an interest rate that fluctuates in accordance with a designated market indicator -- such as the weekly average of one-year U.S. Treasury Bills -- over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary.

 

Amortization
The gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest.

 

Apply For a Loan
The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more.

 

Apply Online
The process of filling out a loan application on the internet. An alternative to filling out paperwork or physically meeting with a loan representative.

 

ARM (arm)
A mortgage whose interest rate is raised or lowered at periodic intervals according to the prevailing interest rates in the market. Also called variable-rate mortgage.

 

Assess
To estimate the value of (property) for taxation; To set or determine the amount of (a payment, such as a tax or fine); To charge (a person or property) with a special payment, such as a tax or fine; Sports To charge (a foul or penalty) against a player, coach, or team; To determine the value, significance, or extent of; appraise.