
Adjustable Rate Mortgage (ARM):
This type of mortgage that changes with the interest rates; monthly payments can fluctuate as determined by your lender, although it is most often subject to a rate cape.
Annual Percentage Rate (APR):
The cost if the loan calculated by its yearly interest rate which includes the interests, points, mortgage insurance and other fees associated with the loan.
Balloon Mortgage:
A borrower will get a low interest rate on a mortgage for an initial fixed period of time, anywhere from 5 - 10 years, and after that, the balance is due or is refinanced by the borrower.
Bridge Loan (aka Swing loan):
A short-term loan secured through the house that is being sold to be used toward the closing cost or instruction of the new home that is being purchased.
Closing Costs:
Fees not included in the purchase price of a home that (typically) the Buyer pays to cover the transfer of ownership at closing.
Down Payment:
The cash you use to buy your house, not what you borrow through your mortgage.
Earnest Money Deposit:
The money offered to a Seller to show you are more serious than the next guy...if your offer is accepted, it becomes part of the down payment; if it is rejected, it is returned; and if the Buyer pulls out if the deal it is forfeited.
Fixed Mortgage Rate:
The interest rate and all terms of this type of mortgage (and its payments) remain the same over the course of the loan.
Lock:
interest rates fluctuate, so a lock is a guarantee by a mortgage lender promising that if you close the loan within a certain time frame, the rate won't change.
Mortgage Insurance:
This is required, at the buyer's expense, by the lender if you make less than a 20% down payment of the purchase price. The lender is protected should you default on your loan.
Upside Down Mortgage:
The value of your house has lowered to where it is valued at less than the mortgage balance.
Short Sale:
This is where proceeds form the sale of your house are less than the amount due to the Lender. The Lender decides it is better to sell the property at a moderate loss rather than foreclose on it. The Seller may still be liable for the remaining balance of the loan.
Foreclosure:
A legal process by which a Lender seizes the property of a home owner, usually due to the home owner not making timely payments on the mortgage that the property secures.