Mortgage Glossary
Abstract of Title
A summary of the property's title history. Based on information found in public records, it is used to list the property's transfers of ownership, and to determine if there are any liens or defects that must be cleared before the sale.
Adjustable Rate Mortgage
A mortgage in which the interest rate periodically adjusts based on a pre-selected economic index, such as Treasury bill or prime rates. The initial interest rate, or "teaser rate," is fixed for a given number of years, and is usually lower than rates for traditional fixed rate mortgages — making monthly payments lower as well. When the interest rate begins to adjust, mortgage payments may go up or down along with it, at intervals specified in the ARM product disclosure.
Adjustment Date
The lower initial rate of an ARM can increase purchasing power and enable you to consider a more expensive home than might be possible with a fixed rate mortgage. But keep in mind — the interest rate and monthly payments may increase when the rate begins to adjust.
Adjustment Period
The amount of time between the adjustment dates for an adjustable rate mortgage (ARM). Many ARMs have a one-year adjustment period, meaning that the interest rate will adjust (go up, down, or stay the same) every year. But there are ARMs with six-month and even three-year adjustment periods.
Amenity
A feature of a property that increases the attractiveness or value, but is not necessarily essential to the property's use. Amenities include features such as gardens, pools or beautiful views.
