MTG Glossary

ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

ABSTRACTION METHOD
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

ACCELERATION CLAUSE
A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. Usually when the borrower defaults on the loan.

ACCESSORY BUILDING
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

ACCRETION
The natural growth of a piece of land resulting from forces of nature

ACRE
43,560 square feet. A measurement of area.

ACTUAL AGE
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE

ADJUSTMENT DATE
The date the interest rate changes on an adjustable rate mortgage.

AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements

ADDENDUM
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ADJUSTED BASIS
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

ADJUSTED SALES PRICE
An opinion of a property’s sales price, after adjustments have been made to account for differences between it and another comparable property.

AESTHETIC VALUE
The additional value a property enjoys based on subjective criteria such as look or appeal.

AFFIRMATION
A declaration that a certain set of facts are truthful.

AFFORDABILITY ANALYSIS
A calculation used to determine an individual’s likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT 
A person who has been appointed to act on behalf of another for a particular transaction.

AMENITY
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

AMERICAN SOCIETY OF APPRAISERS
An organization of appraisal professionals and others interested in the appraisal profession.

AMORTIZATION
The repayment of a loan through regular periodic payment.

AMORTIZATION SCHEDULE
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM  
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

AMPERAGE
A measure of electric current describing the magnitude.

ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.

ANNUITY
A sum of money paid at regular intervals, often annually.

APPLICATION
A form used to apply for a mortgage loan that details a potential borrower’s income, debt, savings and other information used to determine credit worthiness.

APPRAISAL
A ”defensible” and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

APPRAISAL FOUNDATION
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAISAL INSTITUTE
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAISAL REPORT
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation’s Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

APPRAISED VALUE
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER 
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECIATION
The natural rise in property value due to market forces.