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ABSTRACT OF TITLE

A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

ACCELERATION CLAUSE

Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.

ADJUSTABLE -RATE MORTGAGE (ARM)

A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of change in a specified index. Interest rates may move up or down, as market conditions change.

AGREEMENT OF SALE

Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.

AMORTIZATION

A payment plan which enables the borrower to reduce his debt gradually through monthly payments of principal.

ANNUAL PERCENTAGE RATE (APR)

The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (point).

APPRAISAL

An expert judgment or estimate of the quality or value of real estate as of a given date.

ASSUMABLE MORTGAGE

A mortgage that can be taken over ("assumed") by the buyer when a home is sold.