Amortization - The gradual repayment of a mortgage by installments, calculated to pay off the obligation at the end of a fixed period of time.
Appraisal - A professional opinion in the value of a property due to changes in market conditions or other causes.
ARM (Adjustable Rate Mortgage) - A home loan in which the monthly payment may change during the term of the loan. The "cap" is the percentage change limit the loan can have.
Earnest Money - A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Escrow - The holding of documents and money by a neutral third party prior to closing; also, an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
FHA Mortgage - A mortgage that is insured by the Federal Housing Administration. Also referred to as a "government" mortgage.
Lock-in - A written agreement guaranteeing the home buyer a specific 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.
MLS (Multiple Listing Service) - A computerized database of all the homes and land in an area listed for sale by local Realtors.
Origination Fee - A fee paid to a lender for processing a loan application. It is stated as a percentage of the mortgage amount.
PITI - Stands for Principal, Interest, Taxes, and Insurance - the components of a monthly mortgage payment.
Points - A one-time charge by the lender to increase the yield of the loan. A point is 1 percent of the amount of the mortgage.
Pre-paids - Monies collected at closing to begin escrow accounts for property taxes, homeowner's insurance, and mortgage insurance premiums.
Private Mortgage Insurance (PMI) - Insurance provided by non-government insurers that protect lenders against loss if a borrower defaults. Fannie Mae generally requires PMI for loans with loan-to-value percentages greater than 80 percent.
Title or Deed (in NC) - A legal document evidencing a person's right to or ownership of a property.
Truth-in-Lending Act - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR (Annual Percentage Rate) and other charges.
Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's creditworthiness and the quality of the property itself.
VA Loan - A loan that is guaranteed by the U.S. Department of Veterans Affairs. Also referred to as a "government" mortgage.