Adjustable Rate Mortgage (ARM) - a mortgage whose interest rate changes over time based on index.
Annual Percentage Rate (APR) - the total yearly cost of a mortgage expressed as a percentage. It includes interest and other finance charges such as points, origination fees and mortgage insurance.
Debt-to-Income Ratio - the ratio to qualify you for a mortgage. Compares your total monthly housing expense and other debt (the amount you pay out) with your total monthly gross income (the amount you earn).
Deed - the legal document conveying title to a property.
Down Payment - the difference between the sales price of the home and the mortgage amount. Buyer pays with cash and does not finance with a mortgage.
Earnest Money - a deposit given to the seller to show that a prospective buyer is serious about purchasing the house.
FHA Loan - a mortgage that is insured by the Federal Housing Administration (FHA).
Fixed-Rate Mortgage - a mortgage in which the interest rate does not change during the entire term of the loan.
Homeowner's Insurance - Insurance that protects your home and possessions from theft and damage.
Interest - a fee you pay for borrowing money.
PITI - "Principal-Interest-Taxes-Insurance", the four elements of your monthly mortgage payment.
Prequalification - the process of pre-determining how much money a prospective buyer might be eligible to borrow. Prequalifying for a loan does not guarantee approval.
Principal - your loan amount, not including interest; the amount borrowed or remaining unpaid. Also, the part of the monthly payment that reduces the outstanding balance of a mortgage.
Purchase/Sales Agreement - a contract between the buyer and seller that defines the terms and conditions of the home purchase.
Title - written evidence that proves you are the owner of your property.
Underwriting - the analysis of your overall credit and property value and the determination of a mortgage rate and term.