A glossary is an alphabetized list of terms with their explanation/definition. When it comes to home mortgage loans, there are so many terms it would take ten pages to cover them all. However, I’ve extracted the most important and put them below.
Acceleration Clause – A provision giving the lender the right to demand full payment of the outstanding balance if the borrower violates any of the listed contract provisions.
Amortization – The gradual repayment of a mortgage through installment payments. Some call these payments simply mortgage payments.
Appraisal – A professional opinion of the market value of a property. Usually done after a purchase offer is made.
Assessed value – The valuation made by the tax assessor for purposes of taxation.
Clear title – A title free of liens and legal questions regarding ownership.
Deed – Legal document conveying title to a property.
Equity – The difference between the market value of a property and the amount of the outstanding mortgage.
Foreclosure – The process by which a lender may sell a property when the home owner is in default.
Lien – A legal claim against a property that must be paid when the property is sold.
Mortgage – A legal document that pledges a property to the lender as security for payment of a debt. Many states now use a deed of trust instead of a mortgage. The definition is the same.
Notice of default – A formal written notice to a borrower that a default has occurred and that legal action to cure the default may be taken. Almost always associated with foreclosure.
Principal – The amount borrowed, sometimes called loan amount, or the remaining unpaid balance of the amount borrowed. It is also is one part of the mortgage payment which consists of principal, interest, taxes and insurance.
Refinancing – The process of paying off one loan with another loan against the same property.
Title – A legal document establishing the right of ownership.
Underwriting – the process of evaluating a loan application to determine the risk involved for the lender.
While not complete, the above terms are ones you should know and understand before you decide to buy a house.