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Amortization.
The gradual repayment of a debt, through regular installments, that covers interest and principal overtime.
Annual Percentage Rate (APR).
The cost of credit on a yearly basis expressed as a percentage.
Application Fees.
Fees that are paid at the time you apply for a loan. An application fee may include charges for property appraisal and a credit report.
Appraisal.
An estimate of the value of real estate, which is generally completed by a qualified professional appraiser. An appraisal evaluates the market value of a property at a given time based on facts regarding the location, improvements, neighborhood and comparable sales.
Appraised Value.
The determination of the value of a property.
Closed-End Loan.
A loan granted for a specific period of time at a set rate of interest whereby all funds are disbursed at loan closing.
Closing.
The conclusion of a real estate sale where title to the property is transferred and funds are disbursed.
Closing Costs.
Expenses incurred by the borrower/buyer and the seller in a real estate transaction.
Equity.
The difference between the market value of a property and the liens, mortgages or other encumbrances on the property.
Index.
The base for rate changes that the lender uses to decide how much the annual percentage rate will change over time.
Line-of-Credit.
A loan from which funds may be withdrawn at any time up to a specified amount during a specified period and are made available again as principal is repaid.
Loan to Value Ratio (LTV).
The ratio of the loan amount to the property's value.
Margin.
The number of percentage points the lender adds or subtracts from the index rate to calculate the interest rate at each adjustment period on an adjustable-rate loan.
Market Value.
The most likely price a given property will bring if widely exposed on the market, assuming a fully informed buyer and seller.
Prepayment.
Full or partial payment of the principal owed on a loan before maturity date.
Primary Residence.
The dwelling considered being the permanent residence of the borrower.
Second Mortgage.
A loan secured by a mortgage or deed of trust; the lien is junior to another mortgage or deed of trust.
Variable Rate Loan.
A loan where the interest rate is not fixed for the life of the loan. These loans adjust periodically based on an index that changes with market conditions. The rate of interest is the sum of the index plus or minus a margin. Most variable rate loans have periodic interest rate and repayment caps as well as a cap over the life of the loan.
W-2 Form.
Income tax form that is provided by employers to employees stating the income and taxes paid in a calendar year.
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