Effective Interest Rate
The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points. |
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Encumbrance
A claim against a property by another party, which usually affects the ability to transfer ownership of the property. |
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Equity
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance. |
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