Abandonment

The voluntary surrender of property, owned or leased, without naming a successor as owner or tenant.

Absentee Owner

An owner who does not personally manage or reside at property owned.

Absolute Auction

An auction in which the subject property is sold to the highest bidder regardless of the amount of the winning bid.

Absorption Rate

An estimate of the expected annual sales or new occupancy of a particular type of land use.

Abstract Exam

A fee related to the title insurance required by the lender.  A public record search exam is done to insure that both you and the lender are aware of any liens or encumbrances that could affect the property.  For our comparison purposes, an abstract exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.

Abstract of title

The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Accelerated Death Benefit

A provision allowing the policyholder to receive all or part of the benefits of a policy before they die. Benefits may be paid for terminal illnesses, organ transplants, nursing home confinement, etc.

Acceleration clause

The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

Acceleration Clause

A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.

Acceptance

A party’s consent to enter into a contract and be bound by the terms of the offer.

Accepted Contract

A sales contract signed  by both seller and buyer that defines the terms of the sale.

Accidental death benefit

A provision that pays more in case of a death by accident.

Account Condition

An assessment of current account condition. Condition does not show events that created the current state.

Accounts in Good Standing

Credit items that have a positive status and reflect favorably on creditworthiness.

Accrued items

On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Acquisition indebtedness

On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Active participation

The level of involvement real estate owners must meet to qualify to deduct up to $25,000 of passive losses from rental real estate.

Additional child tax credit

Taxpayers may qualify for this credit if the standard child credit eliminates tax liability. This additional credit can cause a refund from the IRS even if the taxpayer does not owe tax.

Additional Principal Payment

A payment by a borrower of more than the scheduled principal amount due, in order to reduce the remaining balance of the loan.

Additional Rate Mortgage

An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan.  Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change.  Most often these interest rate changes are limited by a rate change cap and a lifetime cap.  If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.

Adjustable-rate mortgage

A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.

Adjusted basis

Starting point for determining whether a gain or loss is enjoyed when property or an asset is sold. (Sometimes referred to as cost basis or tax basis.) The basis can change over time; when an investor buys rental property, the basis is the initial amount paid, plus the cost of permanent improvements. Basis can also be reduced by depreciation.

Adjusted Basis

The original cost of a property, plus the value of any capital expenditures for improvements to the property, minus any depreciation taken.

Adjusted Capitalized Cost

Total amount financed on a car loan. Includes deductions like down payments, credits, trade-ins, and rebates, as well as additions for financing charges and other fees.

Adjusted Gross Income

Income from all taxable sources, minus adjustments. Adjusted Gross Income is the amount from which deductions (standard deduction or itemized deductions) and personal and dependent exemptions are deducted to determine taxable income. Adjustments include deductible contributions to Individual Retirement Accounts (IRA), SIMPLE and Keogh plans, contributions to Health Savings Accounts (HSA), job-related moving expenses, etc.

Adjustment Date

The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment Period

The period that elapses between the adjustment dates for an adjustable rate mortgage (ARM).

Administration Fee

The cost of administering a plan. Typically expressed as a percentage; a plan with an expense ratio of 2% charges that amount to your plan, reducing your total return by that amount.

Administrative Fee

A fee charged by a lender to cover the administrative costs of processing your loan request.  For our comparison purposes, this fee is typically a lender fee.

Administrator

A person appointed by a probate court to administer the estate of a person who died intestate.

Affidavit of title

The cost of administering a plan. Typically expressed as a percentage; a plan with an expense ratio of 2% charges that amount to your plan, reducing your total return by that amount.

Affordability Analysis

A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Man-made amenities include swimming pools, tennis courts, community buildings and other recreational facilities.

Age-Based Fund Portfolios

College savings plan portfolios that shift or revise asset allocation according to the age of the beneficiary. Typically, age-based portfolios invest mostly in stock funds. As the beneficiary grows older investments are made in more conservative vehicles like bond funds.

Aggregate Limit

The maximum amount that can be paid for a claim on an insured vehicle, regardless of how many people are injured or the cost of items damaged.

Alienation

The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.

Alienation clause

The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect this clause prevents the borrower from assigning the debt without the lender's approval.

Alimony

Qualifying payments to an ex-spouse deducted as adjustments to income. The recipient of alimony must include payments as taxable income.

Alternative Minimum Tax (AMT)

Special tax designed primarily to prevent the use of loopholes or otherwise legal tax breaks.

Amended return

A revised tax return filed using Form 1040X to correct an error on a return filed during the previous three years. Depending on the mistake made, an amended return could result in owing more tax or receiving a refund.

Amendment

A change to a policy that modifies certain policy benefits.

Amenity

A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Man-made amenities include swimming pools, tennis courts, community buildings and other recreational facilities.

American Opportunity Tax Credit

An educational tax credit designed to reduce education costs. This credit is an expanded version of the Hope Credit, is available for four years of college, and can be used to cover expenses for books as well as tuition and fees.

Amortization

The process of reducing a debt by making regular payments of principal and interest until the loan is eventually repaid. Home mortgages are amortized, for example.

Amortization

A loan repayment plan, which enables the borrower to reduce his debt gradually through monthly payments of principal and interest.

Amortization Schedule

A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principals and shows the remaining balance after each payment is made.

Amortization Schedule

The amount of time required to amortize the mortgage loan. The amortization is expressed as a number of months. For example, for a 30 year fixed rate mortgage, the amortization term is 360 months.

Amortize

To repay a mortgage with regular payments that cover both principal and interest.

Amortized loan

A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Amount Financed

Total amount borrowed to purchase a car. (Same as adjusted capitalized cost.)

Annual Fee

Yearly amount charged to a credit card owner by a creditor. Annual fees are charged regardless of whether or not the credit card is actually used.

Annual Fee

An annual fee for a line of credit is sometimes required. If an annual fee is shown you will be billed for that amount, annually, until the loan is paid in full.

Annual Maintenance Fee

Cost of administering a college savings plan. An annual charge to the account of between $10 and $50 is common.

Annual Mortgagor Statement

A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.

Annual Percentage Rate (APR)

To make it easier for consumers to compare mortgage loan interest rates, the federal government developed a standard format called an "Annual Percentage Rate" or APR to provide an effective interest rate for comparison shopping purposes.  Some of the costs that you pay at closing are factored into the APR for ease of comparison.  Your actual monthly payments are based on the periodic interest rate, not the APR.

Annual Percentage Rate (APR)

The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.

Annual Rate of Return

The rate of return on the investment, expressed as a percentage of the total amount invested.

Annual Report (Form 10-K)

A report contains financial information concerning a company's assets, liabilities, earnings, profits, and other year-end statistics. Public companies are required to file an annual report with the Securities and Exchange Commission (SEC) detailing the preceding year's financial results and plans for the upcoming year. The regulatory version is called Form 10-K.

Annuity

A specified income paid yearly or at other regular intervals, often on a guaranteed dollar basis.

Annuity

A contract, typically with an insurance company, where the company agrees to make regular payments to a person for a fixed period, or for life, in exchange for lump sum or monthly payments.

Annuity plans

Plans provided by insurance companies that offer a predetermined amount of retirement income to individuals.

Anticipation

The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.

Anti-Lock Brakes

Brakes that automatically pump when the pedal is pressed to the floor during an emergency stop.

Application

The process of applying for a mortgage. The term "application" generally refers to a form that is used to collect financial information from a borrower by a lender.

Application Fee

Funds required by a lender in advance of processing a loan request. Generally a deposit is collected to cover the costs of an appraisal and credit report and may or may not be refundable.

Appraisal

An analysis performed by a qualified individual to determine the estimated value of a home.

Appraisal

An estimate of the quantity, quality, or value of something. An appraisal is the process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

Appraisal Fee

In order to verify that the value of your home supports the loan amount you request, an appraisal will be ordered by the lender. The appraisal is generally performed by a professional who is familiar with home values in the area and may or may not require an interior inspection of the home. The fee for the appraisal is commonly passed on to the borrower by the lender. For our comparison purposes, the appraisal fee is a third party fee.

Appraised Value

An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience and analysis of the property.

Appraiser

An independent person trained to provide an unbiased estimate of value.

Appraiser

A person qualified by education, training, and experience to estimate the value of real property and personal property.

Appreciate

Increase in the value of an asset.

Appreciation

An increase in the value of a property due to economic or related causes; may prove to be either temporary or permanent.

Appreciation

An increase in the value of a property due to changes in market conditions and other causes. The opposite of depreciation.

APR

To make it easier for consumers to compare mortgage loan interest rates the federal government developed a standard format, called an "Annual Percentage Rate" or APR, to provide an effective interest rate for comparison shopping purposes.  Some of the costs that you pay at closing are factored into the APR for ease of comparison.  Your actual monthly payments are based on the periodic interest rate, not the APR.

APR (Annual Percentage Rate)

Total annual cost for a loan, credit card, or other type or credit. Expressed as an interest rate.

Arbitrage activity

In the securities industry, the purchasing of undervalued shares and the resale of these shares for a higher profit.

ARM

An ARM (adjustable rate mortgage) is a loan type that allows the lender to adjust the interest rate during the term of the loan.  Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change.  Most often these interest rate changes are limited by a rate change cap and a lifetime cap.  If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.

"As Is"

Vehicle sold "as is," with no warranty or guarantees. Purchaser of the car is responsible for all repairs, etc.

Ask

Price at which a seller is willing to sell.

Assessed Value

The valuation placed on property by a public tax assessor for purposes of taxation.

Assessment

The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.

Assessment

The imposition of a tax, charge, or levy, usually according to established rates.

Assessment Rolls

The public record of taxable property.

Assessor

A public official who establishes the value of a property for taxation purposes.

Asset

An item of value that increases net worth. A house is an asset.

Asset

Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds and so on).

Asset

Any item owned that has value and can be sold.

Asset Allocation

A term for the way in which a person distributes investments into asset classes.

Asset Allocation

A strategy for maximizing gains while minimizing risks in an investment portfolio. Asset allocation divides assets on a percentage basis among different categories of investments like stocks, bonds, and cash.

Asset Class

A class of investments sharing similar characteristics, including risk factors and return rates. Stocks, bonds, real estate and cash are examples of types of asset classes.

Assets

Items owned by a person or corporation that hold value and can be easily exchanged for cash. Common assets include securities, inventory, houses and cars. Financial statements show assets as the amount of a person's total liabilities and equity.

Assignment

Transferring rights and benefits of an insurance policy to another party.

Assignment

The transfer of a mortgage from one person to another.

Assumable Mortgage

A loan that does not have to be paid in full if the home is sold.  Instead, the new owner can take over payments on the existing loan and pay the seller the difference between the sales price and the balance on the loan.

Assumed interest rate

Minimum interest rate on a variable life insurance policy.

Assumption

The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.

Assumption Clause

A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.

Assumption Fee

The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

Assumption of mortgage

Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.

Attorney Opinion

Commonly referred to as a "title opinion".  This fee is related to the title insurance required by the lender.  It is a document issued by an attorney listing any liens or encumbrances that could affect the property that are a matter of public record.  For our comparison purposes, the attorney opinion fee is considered to be a third party fee and may be included in the title insurance or closing fee by some lenders.

Attorney Witness

Related to the settlement/closing fee.  This fee is standard in some states and is the closing attorney's fee for witnessing the signing of the closing documents.  For our comparison purposes, an attorney witness fee is considered to be a third party fee and may be included in the title insurance or closing fee by some lenders.

Attorney-in-fact

One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

Attorneys opinion of title

An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership.

Audit

Review of a tax return by the IRS. The filer of the return is required to prove income and deductions made.

Authorized User

Person allowed to use a credit card by the owner of the card. The owner of the card is still responsible for repayment.

Average Final Compensation (AFC)

Person allowed to use a credit card by the owner of the card. The owner of the card is still responsible for repayment.