1. Adjustable Rate Mortgage (ARM): A mortgage loan or deed of trust which allows the lender to adjust the interest rate in accordance with a specified index periodically and as agreed to at the inception of the loan. Also called variable rate mortgages (VRM).

2. Annual Percentage Rate (APR): A term defined in section 106 of the Federal Truth in Lending Act (PL 90-321; 15 USC 1606), which reflects on an annualized basis the charges imposed on the borrower to obtain a loan (defined in the Act as "finance charges"), including interest, discounts and other costs.

3. Appraisal: An opinion or estimate of value. Also refers to the process by which a value estimate is obtained. Lenders require appraisal information to determine the size of a loan.

4. Caps: A limit on the amount by which the payment may increase or decrease, or on the amount by which the interest rate may increase or decrease.

5. Closing Costs: Fees paid to affect the closing of a mortgage, such as an origination fee, discount point, title insurance fees, survey fees, and escrow's fees, etc.

6. Conforming Loan: Loan amount lower than $300,700.

7. Conventional Loan: Loans are not insured or guaranteed by a government agency such as HUD/FHA, VA, or the Farmers Home Administration.

8. Down Payment: A portion of the sales price paid to a seller by buyer to close a sales transaction, with the understanding that the balance will be paid later. Also, the difference between the sale price of real estate and the mortgage amount.

9. Escrow: An item of value, money or documents, deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate. In some parts of the country, escrows of taxes and insurance premiums are called impounds or reserves.

10. Fixed Rate Mortgage: A mortgage in which the interest rate and payments remain the same for the life of the loan.

11. Good Faith Estimate: Full disclosure of all finance fees associated with a loan.

12. Home or Condominium Owners Association (HOA): A nonprofit corporation or association that manages the common areas and services of a planned unit development, it holds title to common areas.

13. HUD: The Department of Housing and Urban Development. A government entity responsible for the implementation and administration of housing and urban development programs. HUD was established by the Housing and Urban Development Act of 1965 to supersede the Housing and Home Finance Agency.

14. Impound: See Escrow.

15. Interest Rate: Consideration in the form of money paid for the use of money, usually expressed as an annual percentage rate.

16. Jumbo Loan: Loan amount above $300,700.

17. Loan to Value Ratio: The ratio of mortgage amount to appraised value or sales price of real property. Used by lenders to determine maximum loan amounts as set by law.

18. Lock-in Rate: The rate that a mortgage banker guarantees a borrower during a specific period of time. It is important for borrowers to lock-in when rates start going up.

19. Margin: An amount added to the index value to determine the accrual rate of an adjustable rate mortgage.

20. Point: An amount equal to one percent of the principal amount of a mortgage. Loan discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan to a competitive position with other types of investments.

21. Prepaid interest: Mortgage interest that is paid in advance or when it is due.

22. Pre-payment Penalty: A charge the mortgagor pays the mortgagee when the loan is prepaid.

23. Private Mortgage Insurance (PMI): Insurance written by a private company protecting the mortgage lender against financial loss occasioned by a borrower defaulting on the mortgage.

24. Truth in Lending Law: The Truth-in-Lending Act (PL 90-321; 15 USC 1601 et seq.). Part of the Consumer Credit Protection Act, is a federal law that requires lenders to provide full written disclosure of credit terms and conditions, the finance charge, the annual percentage rate, and other charges incurred in a loan contract.