COMMON INVESTMENT TERMS EXPLAINED: Part 17

Welcome back for more terms! Today we’re jumping into real estate investment terms, which is our favorite… so give us a holler if you have questions.

Acceleration Clause: This is a clause in your mortgage that allows the lender to call the remaining principal of the loan due under certain circumstances. The most common reason for this occurring is if the borrower defaults on the loan.

Adjustable-Rate Mortgage (ARM): A mortgage in which the interest changes periodically. The interest rate is tied to a specified index.

Amortization: Your mortgage payment is applied to two things: the interest and the principal. As the loan is paid down, the interest portion of the payment decreases and the portion used toward the principle increases.

Annual Percentage Rate (APR): This is the true cost of your mortgage and takes into account all expenses. The APR includes fees and points, as well as the interest rate of your mortgage.
Your APR is always higher than the interest rate of your mortgage. Also, it will tell you what your effective interest rate is, allowing easy comparison to other loan options.

Thanks for reading! Stay tuned for more terms.