Borrower's Dictionary

Adjustable Rate Mortgage (ARM)

A loan secured by real estate where the interest rate on the loan periodically adjusts based on an index which reflects the cost to the lender of borrowing on the credit markets.

Annual Percentage Rate (APR)

Total yearly cost of the loan which includes the interest rate and other prepaid finance charges.

Appraisal

An independent evaluation conducted on real estate to determine the property’s market value.

Closing

The meeting between the buyer, seller, and lender where the property and funds legally change hands. Closing is also called a settlement.

Closing Costs

The fees incurred when purchasing a home or refinancing the mortgage on a property. Costs vary by transaction, and may include lender or third-party fees or prepaid expenses, like taxes, insurance and interest.

Consumer Loans

Secured loans for personal property (other than real estate) and unsecured loans based only on creditworthiness of borrower.

Down Payment

Up-front money you need for a home purchase that is not financed by the mortgage. Getting financial help with a down payment—or using gift monies toward it may be possible depending on the loan program. Ask your loan officer for more information.

Escrow

Monies held in an account held by the lender into which the homebuyer deposits money for tax or insurance payments as part of their scheduled payments.

Interest Rate

The charge for borrowing money, paid over a specific period of time.

Hazard Insurance

Protects your home or property against loss. In more uncommon cases Flood Hazard Insurance may be required if your home is located in a Special Flood Hazard Area. 

Mortgage

A debt instrument, secured by specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make real estate purchases without paying the entire value of the purchase up front. Mortgages are also known as "liens against property" or "claims on property."

Pre-approval process

The process involves the same steps as an application. You'll provide detailed information about your income and assets that will be reviewed by the lender. If approved, you'll get a commitment by the lender for a specific loan amount. (When you apply for a mortgage, the property must be approved in addition) Pre-approval shows you have the resources to make the purchase and it helps you act quickly when you find the perfect home.

Title Insurance

Protects your home against loss arising from problems connected to the title to your property.