ADJUSTABLE RATE MORTGAGE (ARM) - A loan that permits the interest rate to be changed periodically.
AGREEMENT OF SALE - The contract in which the seller and buyer agree with conditions and terms spelled out and signed by both parties.
AMORTIZATION - The gradual reduction of the principal of a loan. The loan amount is reduced as each payment is made towards the principal.
APPRAISAL - Estimated value of a property to determine it's market value.
BALLOON MORTGAGE - A mortgage with a large amount due at the time of maturity.
CLOSING COSTS - Fees that are added to the price of the property, paid by the buyer and seller at the closing.
CONDOMINIUM - The buyer owns title to the residential unit, shares common areas with other unit owners and pays maintenance fee to the condominium association for property upkeep.
CONVENTIONAL LOAN - A fixed rate and term loan, without government insurance.
EQUITY - The value that the property owner excluding any debts against it.
ESCROW - Funds left in trust with a third party, to be paid to a designated recipient at a designated time.
FANNIE MAE - The Federal National Mortgage Association, which buys and sells FHA and Va mortgages.
FREDDIE MAC - The Federal Home Loan Mortgage Corporation, which buys and sells FHA, VA, and conventional loans from members of the Federal Reserve system and Federal Home Loan Bank system.
FHA MORTGAGE - A loan that is insured by the Federal Housing Administration.
FIXED RATE MORTGAGE - A loan that has one set interest rate.
MARKET VALUE - The highest price the buyer is willing to pay for a property and the lowest price the seller will accept.
MORTGAGE - A lien or claim on property given by a buyer to a lender as security for money borrowed.
POINTS - One percent of the mortgage amount.
PREPAYMENT - Payment of mortgage loan, or portion of the loan, before the due date.
PRINCIPAL - The basic loan amount, separate from interest, insurance and taxes.
TITLE - Proof of ownership.
TITLE SEARCH - A check of title records to assure that the buyer is purchasing property, with no liens, encumbrances or other claims which might adversely affect the title's value of marketability.
VA MORTGAGE - a loan guaranteed by the Veterans Administration.