Debt Glossary for alphabet "A"

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1 year adjustable (ARM):
It's a type of adjustable rate mortgage for which the interest rate and monthly payment change every year for the entire tenure of the loan.
A-credit:
This is the best credit rating that the customer can have. Higher score normally reduces the cost of borrowing.
Acceleration Clause:
It allows the lender to actually accelerate the repayment schedule of the loan. It's normally exercised when the borrower breaches any clause of the loan agreement. The lender can demand immediate payment of the loan under the accelerated clause.
Accrued interest:
This is the interest that keeps accumulating on the unpaid principal balance of the loan. The interest amount keeps mounting till the final payment of the principal.
Adjustment interval:
This is the time period during which the monthly payment towards the mortgage remains constant before the next change in the interest rate and monthly payment in an adjustable rate mortgage (ARM) loan.
Affordability:
It is the evaluation of your purchasing power as a customer based on the criteria set by the lender.
Agreement of Sale:
It describes the terms and conditions of a home sale along with the price and is signed both by the buyer and the seller.
Alternative documentation:
Income verification that is done without verifying the tax return but by simply looking at documents like pay-stubs, W-2 Form and bank statements. This is done without depending on third parties to confirm the statements made on the application.
Amortization:
It describes the distribution of the monthly installments between the principal and interest paid towards the repayment of the loan within a fixed period. The initial allotment towards the interest payment remains high and gradually declines as the principal loan balance declines.
Amount financed:
Helps in determining the annual percentage rate. It's calculated by subtracting any prepaid charges from the loan amount and assuming that the loan would not be prepaid.
Annual fee:
It's typically charged on the credit card user once in a year to allow him/her continue with the credit benefits. This fee is applied towards the administrative costs of the credit card.
Actual rate of interest:
The rate of interest at which the loan is locked in. The actual rate of interest determines your monthly payments towards the loan. It is also known as Note Rate.
Annual Percentage Rate (APR):
The annual percentage rate is calculated by including all charges/fees associated with the loan alongwith the actual rate of interest. It helps in determining the actual cost of the loan. Therefore, it can be effectively used by the borrower in comparing the cost of borrowing.
Application:
It's an initial form containing personal and financial information that is needed to be submitted by the borrower to the lender at the time of receiving the loan.
Application Fee:
It is charged by the lender to the borrower to cover the initial costs of processing the loan. It may include costs for property appraisal, pulling the credit report and other expenses.
Appraisal:
It's a written estimate of the value of the property as determined by a qualified appraiser. The property has to be appraised before a mortgage loan is offered to a homebuyer/borrower to learn the true value of it. Normally a fee would be attached to it by the lender and charged against the borrower.
Appraisal fee:
Appraisal fee is charged for appraising the value of the property that acts as the collateral for the mortgage. The fee is normally paid by the buyer.
Asset:
An asset can be anything of monetary or exchange value as owned by an individual, business or institution. An asset can be real estate property, personal property, saving and investment such as bank accounts, stocks, mutual funds and the like.
Assignment:
Describes the transfer of ownership rights and interest on a property from one party to another. The two parties involved in this process are the assignor and the assignee respectively.
Assignment recording fee:
After mortgage loan closing the lender may give the right to collect payments against the loan to a third party. The assignment recording fee is charged by the local recording office which maintains the record of this transfer of rights.
Assumption:
Is an agreement between the buyer and seller where the buyer takes over the existing mortgage from the seller. The original borrower however remains liable for repayment as per the mortgage agreement.
Average Daily Balance:
Refers to the average balance in an account maintained over a period of time. It's calculated by totaling the daily balance over a period and then dividing the amount by the number of days in the period. It helps in calculating the interest rate.
Affordable Gold 5:
When the mortgage taken is worth 95% of LTV (Loan to Value) ratio and the remaining 5% is paid by the borrower out of pocket it is known as Affordable Gold 5.

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06-20-2005, 09:59 PM

roxette

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Debt Glossary for alphabet "A"

Hi,

I have enlisted all the major terminologies related to debt under alphabet A above.

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