1. Adjustable-Rate Mortgage (ARM) - A mortgage in which the interest rate is adjusted periodically according to a pre-selected index.
  2. Alternative Financing - A home financing program that accommodates borrowers with special qualifying factors, including poor credit histories.
  3. Annual Percentage Rate (APR) - A yearly percentage rate that expresses the total finance charge on a loan over its entire term. The APR includes the interest rate, fees, points, and mortgage insurance, and is therefore a more complete measure of a loan's cost than the interest rate alone. The loan's interest rate, not its APR, is used to calculate the monthly principal and interest payment.
  4. Appraisal- A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained.
  5. Appreciation/Depreciation - "Appreciation" refers to the increase in a property's value, except for inflation. When a property decreases in value it is called" depreciation."
  6. Assessed Value - The value that a taxing authority places on real or personal property for the purpose of taxation.
  7. Automated Underwriting - A computerized method of reviewing home mortgage applications for loan approval.
  8. Bridge Loan - A form of second deed of trust or mortgage that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold.
  9. Building Codes - Regulate the design, construction, and materials used to meet standardized guidelines for building safety.
  10. Building Permits - Provide official permission to build from the local municipality.
  11. Buyer's Broker - Most real estate brokers and agents work only for the sellers. A buyer's broker serves the interest of the buyer and has no relationship with the seller.
  12. Capital Gains - Used for tax purposes, this is the capital gain you make when you sell your home. For example, if you purchase a property for $100,000 and sell it some years later for $150,000, your capital gain is $50,000.
  13. Closing - The consummation of a real estate transaction. The closing includes the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to complete the sale and loan transaction.
  14. Closing Company - Usually an attorney or title agency representative who oversees the closing and witnesses the signing of the closing documents.
  15. Closing Costs - The costs paid by the mortgage borrower (and sometimes the seller) in addition to the purchase price of the property. These include the origination fee, discount points, appraisal, credit report, title insurance, attorney's fees, survey, and prepaid items such as tax and insurance escrow payments.
  16. Commission - Compensation for negotiating a real estate or loan transaction, often expressed as a percentage of the selling price or loan amount.
  17. Commitment Letter - A formal offer by a lender stating the terms under which it agrees to loan money to a home buyer.
  18. Comparable Market Analysis (CMA) - A written analysis of houses having similar characteristics currently being offered for sale as well as comparable houses sold in the past six months. This enables you to determine if you are paying market value for a home, and to identify whether market prices are rising or falling.
  19. Contingency - A condition that must be met.
  20. Conventional Loan - A mortgage not obtained under a government insured program (such as FHA or VA).
  21. Credit Report - A report detailing an individual's credit history.
  22. Debt-To-Income Ratio - A formula lenders use to determine the loan amount for which you may qualify. Also known as the "back-end ratio." Guidelines may vary, depending on the loan program.
  23. Default - The failure to perform an obligation as agreed in a contract.
  24. Down Payment - Money paid to make up the difference between the purchase price and the mortgage amount.

  25. Down Payment - Money paid to make up the difference between the purchase price and the mortgage amount.