Adjustable-Rate Mortgage (ARM)
interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index

A method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, the principal repayment is very low, while the interest payment is very high. At the end of the loan, the relationship is reversed

Annual Percentage Rate
the actual finance charge for a loan, including points and fees, in addition to the stated interest rate

an expert opinion of the value or worth of a property

Appraisal fee
The amount paid for the lender’s appraisal of the property.

Assessed Value
the value placed on a property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value

Balloon Payment
a large principal payment due all at once at the end of some loan terms

a limit on how much the interest rate can change in an adjustable-rate mortgage

Certificate of Title
a document, signed by a title examiner, stating that a seller has an insurable title to the property

the deed to a property is legally transferred from seller to buyer, and documents
are recorded

Closing Costs
A general term for all the estimated charges associated with the transfer of ownership of the property.

a fee (usually a percentage of the total transaction) paid to an agent or broker for services performed

Comparative Market Analysis (CMA)
a survey of the attributes and selling process of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller’s property

a condition in a contract that must be met for the contract to be binding

a binding legal agreement between two or more parties that outlines the conditions for the exchange of value (for example: money exchanged for title to property)

Credit report fee
The fee charged by the lender to obtain a credit report on the buyer.

a legal document that formally conveys ownership of a property from seller to buyer

Down payment
Cash that the buyer provides the lender as their portion of the purchase price. The down payment is considered the buyer’s equity (or cash investment) in their home.

the value of the property actually owned by the homeowner: purchase price, plus appreciation, plus improvements, less mortgages and liens

a fund or account held by a third-party custodian until conditions of a contract are met

Escrow fee
The amount a buyer pays the escrow company or closing agent for preparing papers, accounting for all  funds and coordinating the information between all parties involved in the transaction.

Fixed-rate mortgage
interest rates on this type of mortgage remain the same over the life of the loan.

a recognizable entity (such as a kitchen cabinet, drape or light fixture) that is permanently attached to a property and belongs to the property when it is sold

Hazard insurance
compensates for property damage from specified hazards such as fire and wind

the cost of borrowing money, usually expressed as a percentage rate

a security claim on a property until a debt is satisfied

Listing contract
an agreement whereby an owner engages a real estate company for a specified period of time to sell a property, for which, upon the sale, the agent receives a commission

Loan amount
The amount of the mortgage based on the purchase price, minus the down payment.

Market price
the actual price at which a property sold

Market value
the price that is established by present economic conditions, location and general trends

security claim by a lender against a property until the debt is paid

Multiple Listing Service (MLS)
a system that provides to its members detailed information about properties for sale

Origination fee
an application fee(s) for processing a proposed mortgage loan

The estimated house payment, including principal, interest, taxes and insurance.

Fees charged by the lender to offset their interest rate, if it’s below the prevailing market rate. One point equals one percentage point—so one point on a $100,000 loan would be $1,000.

Premium mortgage insurance (PMI)
Insurance for the lender, to cover potential losses if the borrower defaults on the loan.

Prepaid interest
The amount of interest due on the loan during the time period between the closing of escrow and the first mortgage payment, due at the time of closing.

Prepayment penalty
a fee in some loans paid by a borrower who pays off the loan before it is due

one of the parties to a contract; or the amount of money borrowed, for which interest is charged

Principal and interest
The loan payment, consisting of the amount to be applied against the balance of the loan, and the interest payment, which is charged for interest on the loan.

divide or assess proportionately

Purchase & sale agreement
a contract between buyer and seller that outlines the details of the property transfer

all financial transactions required to make the contract final

a document that indicates ownership of a specific property

Title insurance fee
A one-time premium that a buyer pays for protection against loss or damage in the event of an incorrect search of public records or misinterpretation of title. The title insurance policy also shows what the property is subject to in terms of liens, taxes, encumbrances, deed restrictions and easements.

Title search
detailed examination of the entire document history of a property title to make sure there are no legal encumbrances

Total cash required
The total amount of cash the buyer will need, including down payment and closing costs.