ADJUSTABLE-RATE MORTGAGE (ARM) – A loan that permits interest rate to be changed periodically.
AGREEMENT OF SALE – The contract in which the seller agrees to sell and buyer agrees to buy, with conditions and terms spelled out and signed by both parties.
AMORTIZATION – The gradual reduction of the principal amount of a loan. The loan is reduced as each payment is made toward the principal.
APPRAISAL – Estimated value of the property to determine its market value.
BALLOON MORTGAGE – A mortgage that has a large amount of the principal due at the time of maturity.
BRIDGE LOAN – A loan that finances a mortgage at the end of one loan and the start of a new one.
CLOSING COSTS – Expenses and fees that are added to the price of the property, paid by the buyer and the seller at the closing. The Agreement of Sale states who pays which costs.
CONDOMINIUM – The buyer owns title to a residential unit, shares common areas with other unit owners and pays maintenance fees to the condominium association for property upkeep.
CONVENTIONAL LOAN – Fixed-rate and fixed-term loan made with government insurance.
CO-OP – In exchange for the right to occupy a co-op unit, the buyer owns shares in the co-op corporation (made up of co-op residents), rather than owning real property.
EQUITY – The value that the property owner has excluding 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 MAE – 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.
MORTGAGE – A lien or claim on property given by a buyer to a lender as security for money borrowed.
POINTS – One percent of the amount of the mortgage loan.
PREPAYMENT – Payment of a 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 the title records to assure that the buyer is purchasing property, with no liens, encumbrances or other claims which mig