A mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as a renegotiable rate mortgage variable rate mortgage.

The date that the interest rate changes on an adjustable rate mortgage (ARM).

Loan payment divided into equal periodic payments calculated to pay off the debt at the end of a fixed period including accrued interest on the outstanding balance.

The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year fixed rate mortgage.

The measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate it provides consumers with a good basis for comparing the cost of different loans.

An estimate of the value of property made by a qualified professional called an “appraiser”. Based on an appraiser’s knowledge experience and analysis of the property.

One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

The meeting between the buyer seller and lender or their agents where the property and funds legally change hands also called settlement. Closing costs usually include an origination fee discount points appraisal fee title search and insurance survey taxes deed recording fee credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

Expenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee property taxes charges for title insurance and escrow costs appraisal fees etc. Closing costs will vary according to the area country and the lenders used.

A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

A report documenting the credit history and current status of a borrower’s credit standing.

The ratio expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

Money paid to make up the difference between the purchase price and the mortgage amount.

The difference between the fair market value and current indebtedness also referred to as the owner’s interest. The value an owner has in real estate over and above the obligation against the property.

An account held by the lender into which the homebuyer pays money for tax or insurance payments. Also, earnest deposits held pending loan closing.

The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

The rate charged for borrowing money.

A sum of borrowed money (principal) that is generally repaid with interest.

The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.

A legal document that pledges a property to the lender as security for payment of a debt.

An individual or company that charges a service fee to bring borrowers and lenders together for the purpose of loan origination.

The lender.

The fee charged by a lender to prepare loan documents make credit checks inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.

Principal interest taxes and insurance. Also called monthly housing expense.

The process of determining how much money you will be eligible to borrow before you apply for a loan.

The amount of debt remaining on a loan before interest.

A commitment issued by a lender to a borrower or another mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.

Obtaining a new mortgage loan on a property already owned often to replace existing loans on the property.

A mortgage made subsequent to another mortgage and subordinate to the first one.

A document that gives evidence of an individual’s ownership of property.

A policy usually issued by a title insurance company which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property and is often borne by the purchaser and/or seller. Policies are also available to protect the lender’s interests.

The decision whether to make a loan to a potential home buyer based on credit employment assets and other factors and the matching of this risk to an appropriate rate and term or loan amount.

A document signed by the borrower’s employer verifying his/her position and salary.

A document signed by the borrower’s financial institution verifying the status and balance of his/her financial accounts