Adjustable-Rate Mortgage (ARM) - A loan in which the interest rate is adjusted periodically to show changes in a given financial index.
Balloon Loan - A mortgage in which a lump sum of the remaining balance is due at the end of the loan term for when the monthly payments are not large enough to repay the loan during the term.
Certified Funds - Buyer must bring certified funds for the exact amount to closing.
Deed of Trust - A document used in many states in place of a mortgage to secure the payment of a note.
Equity - The difference between the fair market value and current indebtedness, also called the owner's interest. It is the value an owner has in real estate over and above the obligation against the property.
Federal Housing Administration (FHA) - A government agency which controls a variety of home-loan programs, including the Sec. 203(b) program which provides low-rate mortgages to qualified buyers who make a down payment as small as 3 percent.
Good Faith Estimate - An estimate from an institutional lender that outlines the costs a borrower will have, including loan-processing charges and inspection fees.
Installment - An Installment loan, such as a student loan or car loan, is a debt that is regularly reported for a specific amount and for a specific term.
Jumbo Loan - Loans that cannot be funded by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation because they are larger (more than $214,600 as of 1/1/97) than the limits set by these two agencies, and therefore, usually carry a higher interest rate.
Loan Origination Fee - The fee charged by a lender to prepare all the documents associated with your mortgage.
Other Income - Other income includes dividends/interest, net rental income, alimony, child support and maintenance. Note: Alimony, child support, or separate maintenance income need only be revealed if the applicant opts to have it considered for the repaying of this loan.
Points (loan discount points) - The prepaid interest charged at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).
Revolving - The term Revolving refers to a debt that generally has a fixed limit, but the outstanding balance and monthly payment may vary from month to month. The best examples of revolving debt are credit cards and gas cards.
Single Family Home - A single family home is a free-standing housing structure or single unit that does not share walls with any other homes.
Title - The document that outlines proof of ownership of a property.
Underwriting - The considerations for making a loan to a potential home buyer. These include: credit, employment, assets and any other factors as well as the choice of an appropriate rate and term or loan amount.