Mortgage
Mortgage Terms
Adjustable-Rate Mortgage (ARM): A mortgage with interest rates and monthly payments adjusted at regular intervals based on changes in either a national or regional index. Also called "variable-rate mortgage."
Amortization: A loan payment schedule characterized by equal periodic payments that are calculated to meet current interest payments and retire the principal at the end of a fixed period (at maturity if the loan is fully amortized).
Annual Percentage Rate (APR): The total yearly cost of a mortgage stated as a percentage of the loan amount; includes such items as the base interest rate, private mortgage insurance, and loan origination fee (points).
Appraisal: A written analysis of the estimated value of a property prepared by a qualified appraiser.
ARM Margin: The spread (or difference) between the index rate and the mortgage interest rate for an adjustable-rate mortgage.
Balloon Mortgage: A mortgage in which the debt service (the regular payments of principal and interest) will not result in the complete payment of the loan by the end of the mortgage term.
Cap: A provision of an ARM limiting how much the interest rate or mortgage payments may increase or decrease.
Cash Reserve: A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two monthly mortgage payments.
Closing: The completion of a real estate transaction that transfers rights of ownership to the buyer. Also called "settlement."
Condominium: A type of property ownership within a multiunit complex in which the homeowner owns a unit and a proportionate interest in certain common areas, such as the grounds of the complex.
Contingency: A condition that must be met before a contract is legally binding.
Conventional Mortgage: A loan that is...
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