Glossary of Mortgage Terms

An absentee owner is someone or something that owns a property but doesn't live there or take care of it on a daily basis.

An accessory dwelling unit (ADU) is a small, self-contained living space that is on the same property as a single-family home. It has its own kitchen, bathroom, and sleeping area.

An adjustable-rate mortgage is a home loan with an interest rate that stays the same for a set amount of time and then changes based on a market index. This means that your monthly payment can go up or down over time.

Investors and lenders use after-repair value (ARV) to figure out how much a property will be worth on the market after planned repairs or renovations are done.

An Airbnb investment is a property bought with the goal of making money from short-term rentals on sites like Airbnb, where nightly rates are often higher than those for long-term leases.

Paying off a mortgage loan over time through regular monthly payments that cover both interest and part of the principal balance is called amortization.

An appraisal gap is the difference between the appraised value of a home and the higher price that the buyer and seller have already agreed on.

An appraisal waiver lets a home buyer or homeowner who is refinancing skip the usual in-person property appraisal if the lender's automated system can confirm the home's value using data that is already available.

The annual percentage rate (APR) is a standard way to show how much it costs to borrow money each year. It includes your interest rate, discount points, and some lender fees.

An assumable mortgage is a type of home loan that lets a buyer take over the seller's current mortgage, including the interest rate, remaining balance, and repayment terms. This means the buyer doesn't have to get a new loan.