A-Credit
A consumer with the best credit rating, deserving of the lowest prices that lenders offer. Most lenders require a FICO score above 700
 

Acceleration clause
A contractual provision that gives the lender the right to demand repayment of the entire loan balance in the event that the borrower violates one or more clauses in the note
 

Accrued interest
Interest that is earned but not paid, adding to the amount owed.
 

Adjustable rate mortgage (ARM)
A mortgage on which the interest rate, after an initial period, can be changed by the lender.
 

Adjustment interval
On an ARM, the time between changes in the interest rate or monthly payment. For example, a 5/1 ARM is one on which the initial rate holds for 5 years, after which it is adjusted every year. The rate adjustment interval and the payment adjustment interval are the same on a fully amortizing ARM, but may not be on a negative amortization ARM.
 

Affordability
A consumer's capacity to afford a house. Affordability is usually expressed in terms of the maximum price the consumer could pay for a house, and be approved for the mortgage required to pay that amount.
 

Agreement of sale
A contract signed by buyer and seller stating the terms and conditions under which a property will be sold.
 

Alt-A
A mortgage risk categorization that falls between prime and sub-prime, but is closer to prime. Also referred to as "A minus".
 

Alternative documentation
Expedited and simpler documentation requirements designed to speed up the loan approval process. Instead of verifying employment with the applicant's employer and bank deposits with the applicant's bank, the lender will accept paycheck stubs, W-2s, and the borrower's original bank statements.
 

Amortization
The repayment of principal from scheduled mortgage payments that exceed the interest due. The schedule of payments less the interest equals amortization. The loan balance declines by the amount of the scheduled payment, plus the amount of any extra payment.
 

Amortization schedule
A table showing the mortgage payment, broken down by interest and amortization, the loan balance, tax and insurance payments if made by the lender, and the balance of the tax/insurance escrow account.
 

Amount financed
On the Truth in Lending form, the loan amount less "prepaid finance charges", which are lender fees paid at closing.
 

Application
A request for a loan that includes the information about the potential borrower, the property and the requested loan that the solicited lender needs to make a decision. In a narrower sense, the application refers to a standardized application form called the "1003" which the borrower is obliged to fill out.
 

Application fee
A fee that some lenders charge to accept an application. It may or may not cover other costs such as a property appraisal or credit report, and it may or may not be refundable if the lender declines the loan.
 

Appraisal
A written estimate of a property's current market value prepared by an appraiser.
 

Appraiser
A professional with knowledge of real estate markets and skilled in the practice of appraisal. When a property is appraised in connection with a loan, the appraiser is selected by the lender, but the appraisal fee is usually paid by the borrower.

Appraisal fee
A fee charged by an appraiser for the appraisal of a particular property.
 

APR
The Annual Percentage Rate, which must be reported by lenders under Truth in Lending regulations. It is a comprehensive measure of credit cost to the borrower that takes account of the interest rate, points, and flat dollar charges
 

Approval
Acceptance of the borrower's loan application. Approval means that the borrower meets the lender's qualification requirements and also its underwriting requirements. In some cases, especially where approval is provided quickly as with automated underwriting systems, the approval may be conditional on further verification of information provided by the borrower.
 

ARM
An adjustable rate mortgage.
 

Assumption
A method of selling real estate where the buyer of the property agrees to become responsible for the repayment of an existing loan on the property. Unless the lender also agrees, however, the seller remains liable for the mortgage.
 

Assumable mortgage
A mortgage contract that allows, or does not prohibit, a creditworthy buyer from assuming the mortgage contract of the seller. Assuming a loan will save the buyer money if the rate on the existing loan is below the current market rate, and closing costs are avoided as well. A loan with a "due-on-sale" clause stipulating that the mortgage must be repaid upon sale of the property, is not assumable.
 

Auction site
See Lead-Generation site.
 

Authorized user
Someone authorized by the original credit card holder to use the holder’s card. The card-holder is responsible for the charges of the authorized user, but the authorized user is not responsible for paying any charges, including his own.
 

Automated underwriting
A computer-driven process for informing the loan applicant very quickly, sometimes within a few minutes, whether the applicant will be approved, or whether the application will be forwarded to an underwriter.
 

Automated underwriting system
A particular computerized system for doing automated underwriting. Mortgage insurers and some large lenders have developed such systems, but the most widely used are Fannie Mae’s “Desktop Underwriter” and Freddie Mac’s “Loan Prospector”.