Adjustable Rate Mortgage (ARM) - A mortgage where the interest rate adjusts periodically based on specified index.
Adjustment date - The day the interest rate changes on an adjustable rate mortgage.
Annual Percentage Rate (APR) - A rate that states the total yearly cost of a mortgage.
Appraised Value - The property value based on recent sales information of similar properties.
Appreciation - An increase in the value of a property. Appreciation is the result of an increased demand for property, improvements to the neighborhood, any improvements or additions made, etc.
Assessment - Determining a property's value for the purpose of taxation.
Broker - Someone who assists in arranging funding or negotiating contracts but who does not loan the money himself.
Cap in Interest - The maximum interest rate on an adjustable rate mortgage that may be change per year or for the life of the loan. Clear Title. A title that is free of liens or any legal question as to the ownership of the property.
Closing Costs - Closing costs are mortgage fees that are paid by the borrower when a property is purchased or refinanced.
Closing - Final arrangements to transfer title of property.
Conventional Mortgage - A mortgage loan that is obtained without any additional guarantees for repayment and is usually given at an 80% loan-to-value ratio.
Credit Ratio - The ratio which results when a borrower's monthly payments are divided their gross monthly income. Expressed as a percentage.
Credit Report - A report on the credit standing of a potential borrower. It is used as part of the criteria to help determine creditworthiness.
Deed - A legal document enables the transfer of ownership of real estate from the seller to the buyer.
Delinquency - Late payment or nonpayment's of principal, interest, taxes or insurance.
Department of Veterans Affairs (VA) - An independent agency of the federal government which guarantees mortgages to eligible veterans.
Down Payment - This is money contributed by the buyer to make up the difference between the purchase price and mortgage amount.
Equity - The current market value of a home minus the outstanding loan balance.
Escrow Account or Impound Account - The portion of a borrower's monthly payment that is set aside to pay the taxes, hazard insurance, mortgage insurance or other special items.
Federal Housing Administration (FHA) - An agency under the U.S. Department of Housing and Urban Development (HUD), it insures loans made by approved lenders to qualified borrowers, in accordance with its regulations.
FHA Loan - A loan insured by the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) open to all qualified home purchasers.
First Mortgage - A mortgage that has first over other mortgages.
Fixed-Rate Mortgage - A loan in which the interest rate does not change over the life of the loan.
Good Faith Estimate - An estimate of charges that a borrower is likely to incur.
Home Equity Loan - A loan where an owner uses the equity in their residence as collateral.
Housing Expenses-to-Income Ratio - The ratio of a borrower's housing expenses that are divided by their net effective income.
Lien - A claim by someone against the property of another as security for a debt.
Loan Amount - The amount of money that one borrows from a financial institution for the purchase of your home.
Loan Officer - An intermediary between borrowers and lenders.
Loan - The amount of total borrowed money.
Loan-To-Value Ratio - The ratio between the amount of the loan amount and appraised value of the property expressed as a percentage.
Maturity - The date the loan is due.
Mortgage Broker - Someone in the business of assisting in funding or negotiating contracts for a buyer. They do not not loan the money.
Mortgage Insurance - Insurance that protects the lender against potential losses should a borrower default on a home loan.
Mortgage - A document that promises property to a creditor for the repayment of the loan.
No-Cost Loan - A loan has no lender costs. The interest rates are higher on loans like this.
PITI - Principal, interest, taxes and insurance.
Points - A point is equal to 1% of the loan amount. They are paid at closing and are tax deductible. The more points you pay, the lower the interest rate.
Prepayment Penalty - The penalty paid for an early pay-off of existing mortgage loan.
Principal - The balance of debt left on a loan.
Private Mortgage Insurance (PMI) - Insurance paid by the borrower to protect the lender in the event of default and charged to the when the Loan-to-Value Ratio is greater than eighty percent.
Rescission - The cancellation of a contract.
Title Insurance - A policy that insures a home buyer against any title search errors or mistakes, and insures against a loss because of disputes over property ownership.
Title Search - An examination of public records to determine the ownership of property.
Truth-in-Lending Law - Provision that requires lenders to reveal the actual costs of borrowing.
Underwriting - The process of approving or denying a loan based on an evaluation of the property and the applicant's creditworthiness and ability to repay the loan.