IRS Qualified Appraisals by a Qualified Appraiser

Helpful Information

AMORTIZED LOAN: Loan payments of interest and principal.

ANNUAL PERCENTAGE RATE (“A.P.R.”): The cost of credit on a yearly basis, expressed as a
percentage.

BALLOON PAYMENT: A lump sum payment on a note.
CASH FLOW: Net income.

COLLATERAL: Assets pledged as security for a loan, such as real property.

CREDIT HISTORY: A record of an individual’s open and fully repaid debts.

DEED OF TRUST (TRUST DEED): Written document by which the title to property is conveyed as security for the repayment of a loan.

DEFAULT: Failure to make mortgage payments on a timely basis, or to comply with other requirements of a mortgage.

DISCOUNT (A MORTGAGE): Purchasing for an amount less than the current balance of the note.

FORECLOSURE: The legal proceeding under which a lender takes possession of the security for a note
in default

GRACE PERIOD: A period of time during which a loan payment may be paid after its due date but not
incur a late penalty.

INCOME STREAM: The payments received on a note. SEE CASH FLOW.

INTEREST: A charge for borrowed money. Also termed “rent on borrowed money”.

MORTGAGE: A legal type of lien on a property as security for a debt.

NOTE: Any written promise to pay.

PAY-OFF AMOUNT: A total balance, amount of a full payment on existing loan or lien.

POINT: One percent of the loan amount, usually referring to the computation of a loan fee

PREPAYMENT PENALTY: A fee assessed for paying the balance of a loan before it is due.

PRINCIPAL: The amount borrowed and remaining unpaid on a note.

RECORDING: The filing of a document with the county recorder to have it copied into
the public records.

RECOURSE: “With Recourse,” the seller or borrower is guaranteeing the payments and making himself personally liable for the performance of the promissory note.

REFINANCE: To borrow money and create a new loan against a property to satisfy an existing
indebtedness.

SECOND LIEN: A mortgage, deed of trust or other lien junior to another lien in first position.

SECURITY INTEREST: An interest that a lender takes in the borrower’s property to assure repayment of
a debt.

SERVICING: Collecting loan payments, paying property tax and hazard insurance, issuing late payment letters, collection and foreclosure processing.

TITLE INSURANCE: Protection for lenders or homeowners against loss resulting from legal
defects in the title.