Accrued Interest - Interest earned and due but not yet paid. 

ARM - Adjustable Rate Mortgage  - loans with interest rates that are adjusted periodically based on changes in a pre-selected index. 

Agreement of Sale -  signed by buyer and seller stating the terms and conditions under which property is sold. 

Amortization - repayment of a loan with periodic payments of both principal and interest. 

APR - the annual percentage rate  or cost of credit expressed as a yearly rate. 

Application - an initial statement of personal and financial information required to apply for a loan. 

Application Fee - fee charged by a lender to cover the initial costs of processing a loan application.

Appraisal - an impartial  written estimate of a property's current market value done by someone with a knowledge of real estate

Appraisal Fee - fee charged by a licensed, certified appraiser to render an opinion of current market value. 

Assignment -  transfer of ownership, rights, or interests in property by one person  to another.

Assumption -  when the buyer of the property agrees to become responsible for the repayment of an existing loan on the property. 

Bankruptcy - a legal proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts. 

Bearer - legal owner of a piece of property. 

Bequest - gift of property by will. 

Blanket Mortgage - a mortgage covering more than one piece of real estate. 

Bona Fide - in good faith. 

Borrower - a mortgager or individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan. 

Broker -  individual who brings buyers and sellers together or  negotiates contracts for a client. 

Buy-Down Mortgage - loan with a below-market rate for a period of time. 

Buyer's Market Market - conditions, such as more sellers than buyers, that favor buyers. 

Cash Out - cash received when you receive a new loan that is larger than the remaining balance of your current mortgage, based upon the equity you have already built up in the house. 

Ceiling - maximum allowable interest rate in an adjustable rate mortgage. 

Certificate of Eligibility - issued by the Veterans Administration to qualified veterans; verifies a veteran's eligibility for a VA guaranteed loan. 

Certificate of Title - a written opinion of the status of title to a property, given by an attorney or title company. 

Closing - the conclusion of your real estate transaction which includes the delivery of your security instrument, signing your legal documents and disbursement of the funds necessary to the sale. 

Closing Costs - the cost for services such as title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, and surveying fees that must be performed before your loan can be initiated. 

Collateral - assets, such as your home, pledged as security for a debt. 

Commission - fee paid to a real estate agent or broker for negotiating a real estate or loan transaction. 

Commitment - promise to lend and a statement by the lender of the terms and conditions under which a loan is made. 

Condominium - a form of property ownership in which the homeowner holds title to an individual dwelling unit as well as a proportionate interest in common areas and facilities of a multi-unit project. 

Conforming Loan - a mortgage loan which meets all requirements of federal agencies such as FNMA and FHLMC. 

Consumer Reporting Agency - a company which collects and sells information to creditors to facilitate their decisions to extend credit. 

Contingency - some condition which must be satisfied before a contract becomes legally binding. 

Contract of Sale - an agreement between a buyer and seller on the purchase price, terms, and conditions of a sale. 

Conventional Loan - a loan not made under any government housing program and not subject to government housing programs restrictions.

Convertible ARMs - a type of ARM loan with the option to convert to a fixed-rate loan during a given time period. 

Conveyance - a document used to effect a transfer, typically a deed or mortgage.

COFI - the cost of funds index measures the weighted-average interest rate paid by savings institutions for sources of funds.

Credit Bureau - a clearinghouse for credit history information. Credit grantors provide the bureau with factual information on how their credit customers pay their bills. This data plus public record information obtained from courthouses around the country, are kept in a file on each consumer. 

Credit Report -  report detailing the credit history of a prospective borrower that's used to help determine a  borrower creditworthiness. 

Credit Score - statistical method of assessing your creditworthiness. Your credit card history; amount of outstanding debt; the type of credit you use; negative information such as bankruptcies or late payments; collection accounts and judgments determine your credit score. 

Deed of Trust - conveys title of real property to a third party. The third party holds title until the owner of the property has repaid the debt in full. 

Default - failure to meet legal obligations in a contract, including failure to make payments on a loan.

Down Payment - the portion of your home's purchase price you need to supply up front in cash to get your loan. For conventional loans, you should strive for a down payment that's at least 20% of your home's value. 
 
Earnest Money - deposit made by a buyer towards the down payment in evidence of good faith when the purchase agreement is signed. 

ECOA - Equal Credit Opportunity Act - a federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of public assistance income. 

Equity - difference between the current market value of a property and the total debt obligations against the property. The down payment of a new mortgage loan represents the equity in the property. 

Escrow - a transaction in which a third party acts as the agent for seller and buyer, or for borrower and lender, in handling legal documents and disbursement of funds. 

FHLMC -  Freddie Mac - Federal Home Loan Mortgage Corporation - an agency that buys loans underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending. 

FHA - Federal Housing Administration - a federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans.

FNMA - Fannie Mae - Federal National Mortgage Association - an agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending. 

Fee Simple - absolute ownership of real property. 

FHA Loans  - fixed or adjustable-rate loans insured by the U.S. Department of Housing and Urban Development. FHA loans are designed to make housing more affordable, particularly for first-time homebuyers. 

FICO  - the most common credit-scoring model used by lenders, it is also known as a Fair, Isaac score. Your FICO can range from 200 to 900. According to this model, the higher your score, the less likely you are to default on your loan.
 
First Mortgage  - a mortgage which is in first lien position, taking priority over all other liens. In the case of a foreclosure, the first mortgage will be repaid before any other mortgages. 

Fixed Rate  - an interest rate which is fixed for the term of the loan. 

Fixed-Rate Loans  - have interest rates that do not change over the life of the loan.  With a fixed-rate loan, you will have predictable monthly mortgage payments for as long as you have the loan. 

Flood Insurance - compensates for physical damage to a property by flood. 

Forbearance  - the act by the lender of refraining from taking legal action on a mortgage loan that is delinquent. 

Foreclosure - Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default. 

Gross Income - total income before taxes or expenses are deducted. 

Hazard Insurance - protects the insured against loss due to fire or other natural disaster.

 HUD - Housing and Urban Development - A U.S. government agency established to implement federal housing and community development programs; oversees the Federal Housing Administration.

HUD-1  Uniform Settlement Statement  - standard form which itemizes the closing costs associated with purchasing a home or refinancing a loan. 

Impound Account - account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insurance. The lender disburses impound account funds on behalf of the borrower when they become due. (Also called an Escrow Account.) 

Initial Cap - limits the amount the interest rate on an adjustable rate mortgage can change during the first adjustment period. 

Initial Rate - rate charged during the first interval of an ARM loan. 

Interest - charge paid for borrowing money, calculated as a percentage of the remaining balance of the amount borrowed. 

Interest Rate - annual rate of interest on the loan, expressed as a percentage of 100. 

Interest Rate Cap  - consumer safeguards which limit the amount the interest rate on an ARM loan can change in an adjustment interval and/or over the life of the loan. 

Joint Tenancy  - ownership of property giving each person equal interest in the property, including rights of survivorship. 

Jumbo Loan A  - mortgage larger than the $275,000 limit set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. 

Junior Mortgage - a mortgage subordinate to the claim of a prior lien or mortgage. In the case of a foreclosure, a senior mortgage or lien will be paid first. 

Late Charge - a penalty paid by a borrower when a payment is made after the due date. 

Lender - a bank, mortgage company, or mortgage broker offering the loan.

Lien -  legal claim by one person on the property of another for security for payment of a debt. 

Loan Application Fee - fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges. 

Loan Origination Fee - charged by a lender to cover administrative costs of processing a loan.

Lock or Lock-In - lender's guarantee of an interest rate for a set period of time. The time period is usually that between loan application approval and loan closing. The lock-in protects you against rate increases during that time. 

Mortgage - legal document by which real property is pledged as security for the repayment of a loan. 

Mortgage Banker - individual or company that originates and/or services mortgage loans.

Mortgage Broker - individual or company that arranges financing for borrowers. 

Mortgage Insurance - protects the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's appraised value.

Mortgage Loan -  loan for which real estate serves as collateral to provide for repayment in case of default. 

Mortgage Note  - legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage or deed of trust or other security instrument. 

Mortgagee - the lender in a mortgage loan transaction. 

Mortgagor - the borrower in a mortgage loan transaction. 

Non-Assumption Clause -  statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender. 

Payment Cap  - a consumer safeguard which limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, they may cause negative amortization. 

Per Diem Interest - interest calculated per day. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first mortgage payment will probably be due the first day of the following month.)

Periodic Cap - a consumer safeguard which limits the amount the interest rate on an adjustable rate mortgage (ARM) can change in an adjustment interval.

PITI - an abbreviation for Principal, Interest, Taxes and Insurance, the parts of a monthly mortgage payment. 

Points - an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are connected: the more points you pay, the lower the interest rate you get. But, the more points you pay, the more cash you need up front since points are paid in cash at closing. 

Power of Attorney - a legal document authorizing one person to act on behalf of another. 

Pre-approval -  process of determining how much money a prospective homebuyer or refinancer will be eligible to borrow prior to application for a loan. A pre-approval includes a preliminary screening of a borrower's credit history. Information submitted during pre-approval is subject to verification at application. 

Prepaid Expenses - taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing. 

Prepaid Interest - is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date. 

Prepayment - full or partial repayment of the principal before the contractual due date. 

Prepayment Penalty  - a fee charged by a lender for a loan paid off in advance of the contractual due date. 

Pre-qualification - process of determining how much money a prospective homebuyer will be eligible to borrow prior to application for a loan.

Principal -  amount of debt, not counting interest, left on a loan. 

PMI - Private Mortgage Insurance - protects the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's purchase price. 

Purchase Agreement - signed by buyer and seller stating the terms and conditions under which a property will be sold. 

Real Property - land and any improvements permanently affixed to it, such as buildings. 

Reconveyance  - transfer of property back to the owner when a mortgage loan is fully repaid. Recording The act of entering documents concerning title to a property into the public records. 

Recording Fee -  paid to an agent for entering the sale of a property into the public records. Refinancing The process of paying off one loan with the proceeds from a new loan secured by the same property.

 RESPA - Real Estate Settlement Procedures Act - federal law that gives consumers the right to review information about loan settlement costs. 

Right to Rescission - the borrower's right, on certain kinds of loans, to cancel the loan within three days of signing a mortgage. 

Second Mortgage - additional mortgage placed on a property that has rights that are subordinate to the first mortgage. 

Settlement (or Closing) - is the conclusion of your real estate transaction. It includes the delivery of your security instrument, signing of your legal documents and the disbursement of the funds necessary to the sale of your home or loan transaction (refinance). 

Settlement Costs  - or closing costs - costs are for services that must be performed before your loan can be initiated. Examples include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, taxes, and surveying fees.

Survey -  measurement of land, prepared by a licensed surveyor, showing a property's boundaries, elevations, improvements, and relationship to surrounding tracts. 

Term -  period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due. 

Title Company - insures title to property. Title Insurance Insurance which protects the lender (lender's policy) or the buyer (owner's policy) against loss due to disputes over ownership of a property. 

Title Search  - an examination of municipal records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property. 

Trade lines - the different credit accounts listed on your credit report. 

Transfer Tax - paid when title passes from one owner to another. 

Truth-in-Lending Act - a federal law requiring written disclosure of the terms of a mortgage by a lender to a borrower after application. 

Usury - excessively high interest which is above the legal rate established by law. 

VA Loans - fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs designed to make housing affordable for eligible U.S. veterans. 

Variable Rate Interest - a rate that changes periodically in relation to an index. 

VOD - Verification Of Deposit - document signed by the borrower's bank or  financial institution verifying the borrower's account balance and history. 

VOE - Verification Of Employment - a document signed by the borrower's employer verifying the borrower's occupation and salary. 

Waiver - a voluntary relinquishment or surrender of a right or privilege. 

Walk-through - final inspection of a home to check for problems that may need correcting before the closing.

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