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Adjustable Rate Mortgage: Mortgage where the interest rate adjusts periodically up or down through a set index. Also called a floating rate mortgage.

Adjusted Gross Income: Gross income of a building if fully rented, less an allowance for estimated vacancies.

Adjustment Interval: The period of time between changes in the interest rate for an adjustable-rate mortgage. Typical adjustment intervals are one year, three and five years.

Amortization: The process of paying the principal and interest on a loan through regularly scheduled installments.

Annual Percentage Rate (APR): This is the actual rate of interest your loan would be if you included all of the other associated costs such as closing costs and points.

Apartment Conversion: When a rental apartment building is converted to individually owned units.

Apartment Rehabilitation: Extensive remodeling of an older apartment building.

Appraisal: An estimate of the value of a property, make by a qualified professional called an appraiser.

ARM: See Adjustable Rate Mortgage.

Assumable Loans: Loans that can be transferred to a new owner if a home is sold.

Balloon (Payment) Mortgage: Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining principal balance, due at a time specified in the contract.

Basis Points (BP): 1/100th of 1% expressed as margin over index rate.

BC & D Lender or Loan: The term BC & D is a rating of the loan. We refer to BC & D as "problem or troubled" credit rather than using these letters.

Bond Financing: Type of financing that is a promise to repay the principal along with interest on a specified date.

Buydown: the process of paying additional points on the loan to reduce the monthly mortgage. There are typically two specific types: a Permanent Buydown, and a Temporary Buydown. In a Permanent Buydown, a sufficient amount of interest is prepaid to lower the rate permanently. In a Temporary Buydown, only a sufficient interest is paid to lower the payment for the first three years. The reason to Temporarily Buydown, a loan is to lower the current payments thereby more easily qualifying for the loan. This usually makes sense because income will usually continue to increase as the interest does. The most common Temporary Buydown is called 3-2-1, meaning three percent lower the first year, tow percent lower the second year, and one percent lower the third year. 

Bridge Loan: Financing which expected to be paid back relatively quickly, such as by a subsequent longer - term loan. Also called a swing loan.

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