Adjustable Rate Mortgage (ARM)
A fully amortizing mortgage where the interest rate is not fixed, but changes at specific periods during the life of the loan at a determined margin above an established index.

Amortization
The systematic and continuous payment of an obligation through installments until the debt has been paid in full.

Annual Percentage Rate (APR)
A term used to represent the percentage relationship of the total finance charge (interest, loan origination fees, discount points, mortgage insurance, etc.) to the amount of the loan.

Appraisal
A report that sets an estimate or opinion of value.

Balloon Mortgage
A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date.

Borrower
The person(s) obtaining a mortgage loan to buy or refinance property.

Buydown
Money advanced by an individual to reduce the mortgage interest rate for a home mortgage either for the entire term or for an initial period of years.

Closing
The consummation of a real estate transaction. The closing includes the delivery of a deed, financial adjustments, the signing of notes and the disbursement of funds necessary to complete the sale and loan transaction.

Co-Borrower
Additional borrower(s) whose income contributes to qualifying for a loan and name(s) appear on all documents with equal obligations.

Commitment
An agreement between a lender and a borrower to loan money by a specified date, subject to compliance with stated conditions.

Conventional Mortgage
A mortgage not insured or guaranteed by a government agency (such as FHA or VA).

Credit Report
A report on the credit history of a prospective borrower used to help determine creditworthiness.

Discount Point
Amount payable to the lending institution by the borrower or seller to increase the lender's effective yield. One point is equal to one percent of the loan.

Down Payment
The difference between the purchase price of the real estate and the mortgage amount.

Earnest Money
A portion of the down payment delivered to the seller or an escrow agency by the purchaser of real estate with the purchase offer as evidence of good faith.

Equity
That portion of property value in excess of any debt against it.

Escrow
A procedure whereby a third party (often your mortgage lender) collects, holds and pays out certain funds on your behalf such as real estate taxes and insurance premiums.

First Mortgage
A lien that has a prior claim to any other liens (except real estate taxes) against a property.

Fixed Interest Rate
An interest rate that does not change during the term of the loan.

Floating
The interest rate and fees not established at the time of application. They may fluctuate up or down with the market until the lender and borrower agree to set them.

Flood Certification Letter
A letter indicating whether or not a property is located in a flood plain.

Hazard or Homeowners Insurance
Insurance coverage that compensates for physical damage to the property by fire, wind, rain, hail or other natural disaster.

Interest
Consideration in the form of money paid to a lender for use of other money.

Loan Processor
Person responsible for gathering all information necessary to determine the qualifications for the loan requested.

Lock In
The interest rate and fees have been agreed upon by both the lender and the borrower.

Monthly Payments
The specified dollar amount to be paid promptly each month. This payment includes the principal, interest and, if applicable, taxes and insurance.