Acceleration Clause

A stipulation in most mortgage loan documents that allow the lender to require full payment in the event the borrower sells the property during the term of the loan.

Addendum

An addition to a contract.

Adjustable Rate Mortgage (ARM)

A type of mortgage loan. Its interest rate adjusts up or down according to an index. Usually, rates fluctuate every six months or one year. ARM loans often offer a lower initial interest rate than a conventional mortgage (usually at least a percent or two lower). With an ARM, the buyer shoulders the risk of changing interest rates.

Agency

The legal representation of a Buyer or Seller by a real estate brokerage. Agency is formed by written agreement and obligates the brokerage to put the buyer or seller’s interests before all others.

Agent

A person licensed by the state to represent clients (for a fee) in the purchase, sale, lease, or rental of real estate. Typical requirements to obtain a real estate agent license include passing a real estate licensing course (usually 90-120 hours of class time), successfully passing the state licensing exam, and clearing a criminal background check. All real estate agents are required to work for a licensed real estate broker, usually as an independent contractor.

Amortization

Regular payment amounts (principle and interest) that liquidate a debt over a set period.

Appraisal

A lender’s official estimate of a home’s market value. The lender selects an appraiser to research recent sold prices of nearby comparable homes. The buyer pays the appraisal fee, which can cost from $250-$500.

Appurtenance

Something on the lot that passes to the buyer. An example is a shed or a free-standing garage.

APR (Annual Percentage Rate)

In addition to just the interest rate, the APR is a calculation that includes all extra fees paid to obtain a mortgage, such as application fees, points, and loan origination fees.

Assessment

The government’s official estimate of the value of a real property. Prepared by the County Assessor for tax purposes. Usually completed on an annual basis.

Assumption

A buyer agrees to take over the mortgage loan obligations of the seller (with the permission of the seller’s lender.) If the buyer subsequently defaults, both the buyer and the seller are responsible, unless the lender specifically releases the seller from further obligation.