mortgages

Assumable Mortgage

A type of financing in which one person may take over the mortgage from another.  For example, Buyer 1 wants to buy a house, so he takes out a mortgage (borrows money from the bank to pay for the house).  If Buyer 1 wants to sell the house to Buyer 2 before the mortgage is paid off, and the loan is an assumable mortgage, Buyer 2 may "step into the shoes" of Buyer 1 and take over the mortgage.

Adjustment Date

The date the interest rate changes on an adjustable-rate mortgage (ARM). On most ARMs, the rate starts out fixed at a discount for an initial period, such as five years. Then it's reset (typically upward) on the adjustment date to reflect current market rates. The rate continues to change on a regularly scheduled basis at each adjustment period.

short sale

A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Short sales usually occur when the homeowner is facing foreclosure. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what is owed. (See also: deed in lieu of foreclosure)

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