Allows the lender to speed up the rate at which your loan comes due or even to demand immediate payment of the entire outstanding balance of the loan should you default on you loan.

Adjustable Rate Mortgage (ARM) mortgage in which the interest rate is adjusted periodically, based on a pre-selected index. Also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the rollover mortgage.

On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.

A consumer with the best credit rating, deserving of the lowest prices that lenders offer. Most lenders require a FICO score above 720.

On an ARM, the time between changes in the interest rate or monthly payment. The rate adjustment interval is often displayed in x/y format, where "x" is the period until the first adjustment, and "y" is the adjustment period thereafter.

Means loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

Annual Percentage Rate (APR) An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan.

A request for a loan that includes the information about the potential borrower, the property and the requested loan that the solicited lender needs to make a decision. In a narrower sense, the application refers to a standardized application form called the "1003" which the borrower is obliged to fill out.

A fee that some lenders charge to accept an application. It may or may not cover other costs such as a property appraisal or credit report, and it may or may not be refundable if the lender declines the loan.

The Annual Percentage Rate, which must be reported by lenders under Truth in Lending regulations. It is a comprehensive measure of credit cost to the borrower that takes account of the interest rate, points, and flat dollar charges.

The amount of the original loan remaining to be paid. It is equal to the loan amount less the sum of all prior payments of principal.

A mortgage on which the borrower pays half the monthly payment every two weeks. Because this results in 26 (rather than 24) payments per year, the biweekly mortgage amortizes before term.

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.

When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

Paying a higher interest rate in exchange for a rebate by the lender which reduces upfront costs.

Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

The meeting between the buyer, seller and lender or their agents, where the property and funds legally change hands. Also called settlement.

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 costs of closing are usually about 3 percent to 6 percent of the mortgage amount.

An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

A home mortgage that is neither FHA-insured nor VA-guaranteed.

The option to convert an ARM to an FRM at some point during its life. These loans are likely to carry a higher rate or points than ARMs that do not have the option..

A report from a credit bureau containing detailed information bearing on credit-worthiness, including the individual's credit history.

Single numerical score, based on an individual's credit history, that measures that individual's credit worthiness. Credit scores are as good as the algorithm used to derive them.

Rolling short-term debt into a home mortgage loan, either at the time of home purchase or later. See Section: Debt Consolidation Loan

Scams designed to relieve you of your money by promising to eliminate your mortgage debt.

A mortgage broker who claims to be compensated entirely by the lender rather than by the borrower.

The difference between the value of the property and the loan amount, expressed in dollars, or as a percentage of the price.

A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

In connection with a home, the difference between the value of the home and the balance of outstanding mortgage loans on the home.

Refers to a neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or "closing." Escrow may also refer to an account held by the lender into which the homebuyers pays money for tax or insurance payments.

One of two Federal agencies that purchase home loans from lenders.

A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderate-priced homes almost anywhere in the country.

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

A mortgage that has a first-priority claim against the property in the event the borrower defaults on the loan. For example, a borrower defaults on a loan secured by a property worth $100,000 net of sale costs.

Federal Home Loan Mortgage Corporation.

Graduated Payment Mortgage, A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

The total amount the borrower earns per month, before any taxes or expenses are deducted.

A promise by one party to pay a debt or perform an obligation contracted by another, if the original party fails to pay or perform according to a contract.

Any permanent structures on land such as buildings, fences and driveways, as well as landscaping, drainage, utilities, etc.

A method of establishing market value by using rental income as a factor for calculating value.

The beginning interest rate at the start of an adjustable-rate mortgage (ARM). It may be lower than the fully indexed rate or "going market rate" and it will remain constant until it is adjusted up or down on the adjustment date.

The percentage of an amount of money which is paid for its use for a specified time; usually expressed as an annual percentage.