Adjustable–rate mortgage or ARM loan – The interest rate remains fixed for a set period then adjusts with market conditions on pre–determined dates. These loans are usually short term.
Amortization – When a loan is repaid by installments, it will be on a schedule that shows the principal and interest over the agreed-upon life of the loan.
Annual percentage rate (APR) – Is a term used to represent the % relationship of the total finance charge amount to the amount of the loan, over the term of the loan.
Appraisal – written report by a certified person. This person will state their opinion on the properties value based on the selling price of similar homes in the neighborhood and the homes characteristics.
Closing – After your lender approves your application, the buyer and lender sign the security instrument for the loan, it states the terms and conditions for the loan. Then the funding for the loan is turned over to the homebuyer.
Closing agent – Or escrow is the neutral 3rd party to a transaction that handles the closing and is a witness to the signing of the closing documents.
Closing costs – The cost paid by the borrower & seller in addition to the purchase price of the property. (Lender's fees, title fees, and appraisal costs).
Commitment letter - This is a binding, pledge, by the lender to the person applying for a loan, with conditions.
Credit report – A report that shows all of the information about a person credit history and ability to pay.
Credit score – Is a score or numeric value that reflects the applicant's history of satisfactory or unsatisfactory payment, banking, and employment.
Debt–to–income ratio – Lenders use a formula that determines the loan amount you can qualify. Make sure to clear up as much debt and payments as possible before applying for a loan.
Deed – A piece of paper and or a legal document that says who owns the property.
Down payment – A percentage of the property sales price that you initially put up front to close the transaction. Also known as the difference between a home mortgage amount and the sales price.
Equity – If you owe less than the property is worth you have equity. You can borrow against the equity or sell your property and take your built equity.
Fixed–rate mortgage – The interest rate does not change throughout the life of a fixed rate mortgage loan.
Flood insurance – Properties in or near a flood zone may require additional flood insurance.
Good faith estimate – The approximate costs a borrower will pay for a loan.
Homeowners insurance or hazard insurance - Insurance that is required by the buyer to protect against fire loss, natural causes, theft, vandalism, and more if desired.
HUD–1 Settlement Statement – A disclosure that discloses closing costs.
Interest rate – Interest rate you pay the person or bank for a loan.
Lien – A unsettled claim on the property or as a security for a loan/debt.
Loan–to–value – Appraised value to the amount borrowed.
Mortgage insurance or Property Mortgage Insurance PMI – This is an insurance policy that repays some of the loans if the borrower can't or does not pay.
Mortgagee – The lender.
Mortgagor – The borrower.
Note – The agreement or piece of paper that states the home mortgage amount to being borrowed. Also, the conditions and terms of the loan.
Points – One point is 1 percent of the loan amount. Points are usually paid by the borrower and should reduce the interest rate.
Principal – The amount of the loan, excluding interest; or the remaining balance of the loan, excluding interest.
Title – Evidence of the current ownership or right to a property and the history of ownership.
Title insurance – Insurance that insures the buyer won't suffer any loss when the property gets transferred with a defect or a lien.
Truth–in–lending statement – A required statement that informs consumers on the costs of financing for their specific loan, the interest rate, and all other material terms such as payments and amounts.