Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that changes over time in line with movements in a financial index. ARMs can also be referred to as AMLs (adjustable mortgage loans) or VRMs (variable rate mortgages).
The length of time between interest rate changes on an ARM. 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.
Repayment of a loan in installments of principal and interest, rather than interest-only payments.
An estimate of the property’s value.
The value placed on a property for purposes of taxation.
Assumption of Mortgage
A buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (typically the seller) from liability.
A lump sum principal payment due at the end of some mortgages or other long-term loans.
A permanent buy-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.
The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of a mortgage.
CC&Rs or Covenants, Conditions and Restrictions
A recorded document that controls the use, requirements and restrictions of a property.
An amount paid by the seller to the listing and buyer’s agent for handling the real estate transaction.
The period of time during which a loan approval is valid.
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 separately owned space whose interior surface (walls, floors and ceiling) serve as its boundaries.
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.
A provision in some ARMs that enables home buyers to change an ARM to a fixed-rate mortgage, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may involve an extra charge.
A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements.
CRB or Certified Residential Broker
To be certified, a broker must be a member of the National Association of REALTORS®, has five years of experience as a licensed broker, and have completed required Residential Division courses.
The comparison of a buyer’s housing costs to his or her gross or net effective income and the comparison of a buyer’s total long-term debt to his or her gross or net effective income. The first ratio is the housing ratio and the second is the total debt ratio.
A document which, when properly executed and delivered, conveys title of real property.
To make known or public. By law, a seller of real property must disclose facts that affect the value or desirability of the property.