Ampere to Appraisal
Amp
See the Ampere entry.
Ampere
A measurement of the rate at which electricity is carried by a current. Amperes times volts equal watts. Make sure you understand these concepts before you start working with your property’s electrical system.
Anchor Bolt
A bolt used to stabilize or anchor a structure. The metal anchor bolt usually attaches to a cable to a concrete footing.
Anchor Tenant
The key tenant (or tenants) in a commercial complex. They are typically long-term tenants with superior credit and occupying a sizable or largest space in the complex. They are often instrumental to the success of the entire complex, as anchor tenants are often the greatest draw for customers and other, smaller tenants.
Anchored Property
Any investment property that has at least one anchor tenant.
Ancient Lights
The old Common Law principle for the right to light. See the Right to Light entry for more information.
Annexation
With regard to real estate fixtures, it is similar to attachment, which is the physical act of attaching a personal property to real property. The result of such an annexation coverts that personal property into a fixture (which is considered real property).
However, municipalities may also annex real property to increase its size. Like much of real estate, state law governs much of land annexation. The most common type of government annexation is when an incorporated community annexes unincorporated properties. However, even incorporated properties can sometimes be incorporated.
Anniversary Date
The date at which interest rate or payment amount adjustments are made for adjustable-rate mortgage (ARM) loans. With a one-year ARM, the anniversary date is annual from the official start date; with six-month ARMs, the anniversary date occurs every six months.
Annual Cap
The annual cap is a variation of the periodic cap, both of which limit the adjustments to the interest rates of an Adjustable Rate Mortgage (ARM) loan. With one-year ARM loans, interest rates adjust on the annual anniversary date by adding the margin to the principal. The annual cap limits the interest rate increase from one year to the next.
Annual Percentage Rate (APR)
The cost of credit expressed as a yearly percentage rate that presents the total finance charge in relation to the total loan amount. This is usually calculated for and disclosed on the Truth-in-Lending (TiL) disclosure.
Translation: the total, projected long-term cost of your proposed loan, including all interest and lender fees. The APR is not the interest rate. The APR is higher than the loan’s official interest rate, because the APR also includes all lender-related charges such as points, underwriting fees and tax service charges.
Anticipation Principle
A principle used in real estate appraisals that assumes that a property’s value will be affected by a future status of the property. For example, a house may be worth more in the future if it is clearly in the path of new development. Similar principles that are taken into consideration when appraising real estate are the principles of change, competition, conformity and surplus productivity.
Anticipatory Breach
A written or verbal warning indicating that one party projects a default on one of the contact covenants or an inability to meet one or more of the contract’s obligations.
Anti-Deficiency Loan
See the Non-Recourse Loan entry.
Antitrust Laws
The collection of federal and state laws that prohibit business activities that create monopolies or unfairly hinders free trade. In addition to prohibiting monopolies and monopolistic activities, antitrust laws also make price-fixing among real estate agents illegal and prohibit boards from barring members with unfair restrictions. The underlying federal regulation governing antitrust laws is the 1890 Sherman Antitrust Act. It is enforced by the Justice Department’s Antitrust Division and the Federal Trade Commission.
A-Paper
Loans, bonds and other debt instruments that are considered low-risk and high quality. Commercial and investment bonds are analyzed by rating agencies and given a grade. The highest ratings are given to A-paper investments.
In the residential loan industry, conforming loans are considered A-paper, while non-conforming loans are considered sub-prime, B-paper or C-paper. Very high-risk loans, such as hard-money loans and financing for borrowers currently in bankruptcy or foreclosure are considered D-paper.
Apartment
Individual residential units in a multi-family building are normally called apartments. For most people in the mortgage and real estate industry, an apartment building is one with five or more residential units. However, regardless of the number of units in a building, each unit is considered a separate apartment.
Application (Loan)
With mortgage loans, the application is integral for the initial information-gathering and pre-qualification phase of the mortgage loan approval process. The mortgage lender’s processing and underwriting will revolve around verification and documentation of the information gathered in the application documents.
Note that intentionally providing false information on an application is considered bank fraud. You may be open to prosecution in either state or federal court, depending on whether the loan was issued by a state or federally chartered bank.
Application Fee
With mortgage loans, the charge to a potential borrower for initial processing costs. Often but not always, the application fee will pay for part of the appraisal and credit report expenses.
Unless it is used to pay for services actually rendered before the closing (such as appraisal, credit and engineering reports), you should be wary of paying an application fee before the loan closing on any residential property. Commercial real estate, however, often require an application fee before the closing.
Appraisal
Most lenders consider the property’s appraised value as important as the borrower’s credit and income. The appraisal is an open-market estimate of a property’s value, as compiled by a certified and lender-approved appraiser.
The appraiser is primarily concerned with the property’s market value — as compared to the property inspector, who is more concerned with the property’s structural and functional worthiness. The appraiser will research recent sales of comparable properties, as well current construction costs and rental comparisons, to calculate the probable market value for the subject property. With mortgage loans, your final loan amount is normally a percentage of this appraised market value or the purchase price, whichever is lower.
