The gradual repayment of a mortgage loan by installments.

The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

An appraisal is a written analysis of the estimated value of a property, as prepared by a qualified appraiser.

An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

The person designated to receive the income from a trust, estate, or a deed of trust.

In good faith, without fraud.

An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement." At this meeting, ownership of the property is transferred from the seller to the buyer.

Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or Realtors often provide estimates of closing costs to prospective homebuyers.

A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

An abbreviation for "comparable properties", used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Interest paid on the original principal balance and on the accrued and unpaid interest.

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

A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

An amount owed to another. See installment loan and revolving liability.

A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

A decline in the value of property; the opposite of appreciation.

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.

A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

A mortgage in which the interest rate does not change during the entire term of the loan.

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.

An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

The rate of interest in effect for the monthly payment due.

A property that is not occupied by the owner

A loan that exceeds Fannie Maes mortgage amount limits. Also called a nonconforming loan.

A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

The process by which a mortgage lender brings into existence a mortgage secured by real property.

The unpaid principal balance of the mortgage on a property divided by the property's appraised value. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services.

A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan. See private mortgage insurance.

A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount.

A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.

The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Insurance provided by non-government insurers that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.

A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

A loan that is backed by collateral.

Also known as “closing,” settlement is the last step in buying and financing a home. Settlement is when you and all other parties in a mortgage loan transaction sign the necessary documents.

A company that specializes in examining and insuring titles to real estate.

A fiduciary who holds or controls property for the benefit of another.

A loan that is not backed by collateral.

A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.