A legally binding contract component that involves an act of accepting an offer to enter into a contract. A contract cannot exist without both an offer and acceptance. Acceptance is binding and legal when both parties agree to the initial terms or after both parties have accepted all counter offers.
Additional principal payment:
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan and amortize the loan at a faster rate.
An interest rate that is adjusted or floats periodically on the basis of changes in a specified index and in relation to a specified margin.
Adjustable rate mortgage (ARM):
A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index and in relation to a specified margin.
A tax basis calculation referring to the original cost of a property plus the cost of any improvements or other step-ups less depreciation.
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