ARM- Adjustable Rate Mortgage- A loan that allows the interest rate to be changed periodically.

Agency- A legal relationship in which an owner-principle engages a broker-sales associate in the sale of property or buyer engages a broker-sales associate in the purchase of a property.

APR- annual percentage rate- The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.

Amortization- The gradual repayment of a mortgage by periodic installments.

Appraisal- An estimate of the value of a property

Assessed Value- The valuation placed on property by a public tax assessor as the basis of property taxes.

Assumption of Mortgage- Agreement by the buyer to assume responsibility for a mortgage owned by the seller; the seller remains liable to the lender unless the lender agrees to release him or her.

Balloon Loan- A mortgage that has a substantial amount of the principle due at the maturity of the note.

Broker-a person licensed by a state real estate commission to act independently in conducting a real estate brokerage business.  Although the requirments for a broker's license vary from state to state, an individual usually must have one or more years of experience in the field and must pass an examination.

Buydown- A payment to the lender from the seller, buyer or third party, causing the lender to reduce the interest rate during the early years of the loan.

Cap-A maximum amount of interest that can be charged.

Closing- The final step in transferring ownership of a property from seller to buyer.

Closing Costs- Fees and expenses, not including the price of the home, payable by the seller and the buyer at the time of closing (ex: brokerage commissions, title insurance premiums, inspection, appraisal fees and lender fees)

Contingency- a condition that must be satisfied before a contract is binding

Conventional loan- a fixed rate, fixed term loan that is made without government insurance

Convertible ARM- Loans that give you the opportunity to convert to a fixed rate mortgage, usually between the 13th-60th month of the loan

Cooperative (Co-ops)- a buyer purchases shares in a co-op corporation, made up of the residents in the co-op property.  The buyer owns the shares rather than owning the real property. In exchange, the buyer has the right to occupy a co-op unit.

Deed- a legal document conveying title to a property

Depreciation- Refers to when a property's value decreases

Earnest Money- A payment given to the seller by a potential buyer indicating the buyers intent to complete the purchase of the property

Equity- The owner's value or interest in a property

Escrow- The placement of money or documents with a third party for safekeeping pending the fulfillment or performance of specific act or condition.

FHA Mortgage- A mortgage loan insured by the Federal Housing Administration, permitting lenders to offer better terms.

Fixed Rate Mortgages- a loan that has only one stated interest rate

Hybrid Loans- loans that combine features of fixed rate and adjustable rate mortgages

HUD- Housing and Urban Development- A U.S. government agency established to implement certain federal housing and community development programs.

Lien- a legal claim against a property that must be paid when property is sold.

Loan origination fee- The charge you must pay to the lender for processing your mortgage.

Market Value- The highest price a ready, willing, and able buyer will pay and the lowest price the seller will accept

Mortgage- a lien on real estate given by the buyer as a security for money borrowed from a lender

Mortgage insurance- A policy that provides protection for the lender in case of default and guarantees repayment of the loan in the event of death of disability of the borrower

MLS- Multiple Listing Service

Points- A dollar amount, expressed as a percentage of the mortgage amount, which is paid to a lender as consideration for making a loan.  A point is 1% of the amount of the mortgage loan also called discount points.

P&I-Principle and Interest Payment- A periodic (usually monthly payment that includes the interest charges for the period plus an amount applied to amortization of the principle balance.

PITI- Principle,Interest,Taxes, and Insurance Payments- The periodic payment that includes the principle and interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgage property.

Realtor and Realtor Associate- registered collective membership marks that identify real estate professionals who are members of the National Association of Realtors and subscribe to its code of ethics

title- a document that is evidence of ownership

Title insurance- Protection for lenders and homeowners against financial loss resulting from legal defects in the title

Title Search- A check of title records to identify liens, ecumbrances and ownership rights to the property.

Va Mortgage- a mortgage loan guaranteed by the veterans administration, and agency of the federal government that provides services for eligible veterans