A mortgage in which the interest rate is adjusted periodically based on a specific index.

The reduction of a loan balance by equal periodic payments.

A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.

The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.

An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property

A mortgage loan allowing the buyer of a property to take over the loan of the previous owner at the same interest rate and terms as the original mortgage.

A mortgage calling for monthly payments for a specified period of time and then the entire balance due in one installment.

Money paid by a seller to a lender to reduce the buyer's monthly payments for a home mortgage for an initial period of years.

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."

Interest paid on the original principal balance and on the accrued and unpaid interest.

A conventional loan that conforms to the guidelines necessary for lenders to sell it to Freddie Mac or Fannie Mae on the secondary mortgage market.

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

A clause in an agreement with a lender that allows the borrower to convert an adustable-rate mortgage to a fixed-rate mortgage at designated times.

A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified time frames after loan origination.

An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans.

A mortgage in which the interest rate is set for the term of the loan.

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposi

The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.

An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or c

A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

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

The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property.

A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

The time period during which the lender has guaranteed an interest rate to a borrower.

The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable

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

A loan payment schedule in which the outstanding principal balance goes up because payments do not cover the full amount of interest due.

Any conventional mortgage loan that is over a certain amount for loans bought by quasi-governmental agencies on the secondary mortgage market, such as Freddie Mac or Fannie Mae. A buyer must pay a higher interest rate for these loans because they have to

A closing cost charged by a lender to process a loan - usually expressed as a percentage of the loan.

Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means pa

A fee that may be charged to a borrower who pays off a loan before it is due.

The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

The amount of debt, exclusive of accrued interest, remaining on a loan.

The limit on how much the interest rate can change on an adjustable loan. Periodic caps limit the rate increase from one adjustment period to the next. Overall caps limit the rate increase over the life of the loan.

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "closing."

A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.