Annual Percentage Rate (APR)
A figure expressed as a percentage on the Truth-in-Lending Disclosure form. It is a rate which represents the relationship of the total finance charge (interest, loan fees, points) to the amount of the loan; because the service fees are included, the resulting APR will show as being slightly higher than the contract rate on the application, which is what monthly payments are based on.

Application Fee
A sum of money paid towards estimated mortgage processing expenses such as the appraisal and credit report.

Appraisal
A report by a qualified person setting forth an opinion of value.

Assessment
A charge against a property for taxation. This may be a levy for a special purpose or a tax in which the property owner pays a share of the cost of community improvements.

Balloon Mortgage
A mortgage with monthly payments due for a certain period of time at the end of which the remaining balance is due.

Closing Costs
The costs associated with the sale of real estate.

Conventional Mortgage
A mortgage loan that is not insured or guaranteed by the federal government.

Down Payment
Cash portion of the amount of the purchase of real estate.

Equity
In real estate, it is the difference between the value of the property and the amount owed on the property.

Escrow Account
An account set up by the lender into which the borrower makes periodic payments, usually monthly, for taxes, hazard insurance, assessments, and mortgage insurance premiums. The funds are held in trust by the lender who pays the sums as they become due.

Fixed Rate Mortgage
An interest rate which does not change during the loan term.

Gift Letter
A written explanation signed by the individual giving the gift that states that the recipient has no obligation, under any circumstances, to repay the loan.

Hazard Insurance
An insurance policy which covers property and contents.

Interest Rate
The percentage of an amount of money which is paid for the use of that money over a period of time.

Lien
A legal claim against property as security for an obligation.

Loan-to-Value (LTV)
The ratio between the amount of the mortgage loan and the lower of the sales price or appraised value.

Margin
The percentage a Lender adds to the index rate to determine the new interest rate

Mortgage
A legal document that pledges property to a lender as security for the repayment of the loan. The term also is used to refer to the loan itself.

Mortgage Insurance
Insures the Lender against loss caused by the Borrower’s failure to make the payments.

Mortgage Note
A written promise to repay a stated amount of money at a stated interested rate over a stated period of time.

Non-Conforming Loan
Conventional home mortgages not eligible for sale and delivery to either FNMA or FHLMC due to several factors including but not limited to credit quality and loan amount.

PITI
Principal, interest, taxes and insurance included in our monthly mortgage payment.

Point
One percent (1%) of the mortgage loan amount.

Term
The time limit within which a loan must be repaid.

Title
The legal evidence of ownership to real property.

Truth-in-Lending Act
A federal law that requires full disclosure of credit terms using a standard format.

Underwriting
Analysis of the risk as well as the determination of the appropriate rate and terms on a given loan.