Glossary

A limit on how much a monthly payment or interest rate can increase or decrease, either at each adjustment period or during the life of the mortgage.

A Veteran's Administration appraisal that establishes the maximum VA mortgage loan amount for a specified property.

Document rendering an opinion on the status of a property's title based on public records.

A property title that has no defects. Properties with clear titles are marketable for sale.

A mortgage principal amount that is fixed and cannot be increased during the life of the loan. See also

The final step in purchasing a property where the title is transferred from the seller to the buyer. Closing occurs at a meeting between the buyer, seller, settlement agent, and other agents. At the closing the seller receives payment for the property. Also known as settlement.

Closing costs are the costs involved with buying a house, typically including attorney fees, recording fees and other costs associated with the mortgage closing.

One who is obligated to repay a mortgage loan should the borrower default but who does not share ownership in the property. See also

Security in the form of money or property pledged for the payment of a loan. For example, on a home loan, the home is the collateral and can be taken away from the borrower if mortgage payments are not made.

An individually owned unit within a multi-unit building where others or the Condominium Owners Association share ownership of common areas such as the grounds, the parking facilities and the tennis courts.

A loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. See also

These are used when a borrower is having a house built. The lender will advance cash based on the construction schedule of the builder. When the home is finished, the mortgage will convert into a permanent mortgage.

A disclosure required by the federal government to be given to any borrower applying for an adjustable rate mortgage (ARM).

A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or Rural Economic Community Development (RECD) (formerly Farmers Home Administration).

An adjustable rate mortgage (ARM) that allows a borrower to switch to a fixed-rate mortgage at a specified point in the loan term.

Rules and restrictions governing the use of property.

The borrower's privilege to make payments on a loan's principal before they are due. Paying off a mortgage before it is due may incur a penalty if so specified in the mortgage's prepayment clause.