ACCRUED INTEREST
The interest earned for the period of time that has elapsed since the date of the borrower's last payment.

ACQUISITION COST
The purchase price and closing costs plus any cost incurred for rehabilitation, renovation, or energy improvements.

ADJUSTABLE RATE MORTGAGES (ARMs)
Home loans with interest rates that change periodically. The basis of this movement is a specified index and margin.

AMORTIZATION
Systematic and continuous repayment of a debt in installments, including principal and interest over a set period of time. At the end of the period, the entire debt will have been paid.

ANNUAL PERCENTAGE RATE (APR)
The actual rate you will pay, including interest and other finance charges. Because all lenders must follow the same rules to calculate the APR, it is a good way for applicants to compare the overall cost between loan options.

APPRECIATION
An increase in value; the opposite of depreciation.

ASSESSED VALUE
The value a taxing authority places upon real or personal property for the purpose of calculating taxes.

ASSIGN
To transfer a right, title or interest in property to another.

BALLOON PAYMENT
The remaining balance of a home loan that must be paid in a lump sum at the end of a specified time period. The amount may represent slightly more than a monthly payment or it may be a substantial amount.

BIWEEKLY MORTGAGE or SEMI-MONTHLY MORTGAGE
A mortgage agreement in which payments are made every other week instead of monthly. This will reduce the interest paid and often the term of the loan.

BUY-DOWN
Loans with buy-down plans require that a certain amount (usually a percentage) is paid by the buyer or seller to reduce the interest rate over the initial portion of the loan term or for the whole term. Buy-downs can be either temporary or permanent.

CHATTEL
An item of personal property (as opposed to real property).

CLEAR TITLE
Real property against which there are no liens or judgments.

CLOSING
The conclusion of a transaction. In real estate, closing includes the delivery of a deed, delivery of financial disclosures, the signing of notes and the disbursement of funds necessary to consummate the sale. Title is transferred.

CONVERTIBLE MORTGAGE
An adjustable rate mortgage that contains a clause allowing it to be converted to a fixed rate at some time in the future.

CREDIT REPORT
A report giving a person's credit history. It will show delinquent payments, bankruptcies, foreclosures and public records. There are three national bureaus reporting credit information: Equifax, Experian (formerly TRW), and Trans Union.

DEED
A written instrument that when properly executed and delivered, conveys title or ownership of real property from the seller to the buyer.

DEPRECIATION
Loss of value in real property brought about by age, physical deterioration and functional or economic obsolescence.

DISCOUNT POINTS
Additional charges required by a lender to buy the interest rate to a below-market rate. Each point is equal to 1% of the loan balance.

DOWN PAYMENT
The difference between the sales price of real estate and the loan amount.

EQUITY
The difference between the fair market value and the existing liens on the property, sometimes referred to as the "owner's interest."

FIRST LIEN
A lien on real property that has priority over all other liens.

FIXED-RATE MORTGAGE
A loan where the interest rate will be not charged for its entire term.

FORECLOSURE
A legal proceeding to enforce a lien by sale of the property in order to satisfy defaulted debt.

GOOD-FAITH ESTIMATE
A form provided by a lender (usually at application) that provides a breakdown of estimated closing costs.

INTEREST
Money paid as a charge for the use of money, usually expressed as an annual percentage. Also, a right, share or title in property.

INTEREST RATE
The basic cost of borrowing money, expressed as a percentage.

LEASEHOLD
A method of holding title to a property. The borrower does not actually own the property but has a recorded long-term lease on it. A leasehold estate has a specific duration. Some states allow leases of up to 99 years and consider longer leases to be fee simple ownership.

LIEN
A security claim on property until a debt is satisfied.

LOAN-TO-VALUE RATIO (LTV)
The percentage relationship between the amount of the mortgage loan and the appraised value of sales price of the property - whichever is less.

MATURITY
Termination period of a note. For example, a 30-year home loan has a maturity of 30 years.

NEGATIVE AMORTIZATION
A condition in which the principal of a loan increases over time because payments are less than the amount of interest due in the period. This can occur with adjustable rate mortgages (ARMs).

PITI
An amount that includes Principal, Interest, Taxes and Insurance.

REVERSE ANNUITY MORTGAGE
A loan program that pays a fixed annuity amount based on a percentage of the property's value to benefit the older homeowner who would otherwise have to sell the home in order to realize the equity. The borrower need not repay the loan for a specified number of years or until a specified event occurs, such as the borrower's death or sale of the property.

SECOND MORTGAGE
A loan secured by a mortgage; lower in priority than a first mortgage. Commonly used to supplement first mortgage loan or assumption at the time of purchase or as a way of raising cash for home improvements.

SURVEY
A measurement of land prepared by a registered surveyor, showing the location of the land, its dimensions and any improvements on the land.

TAX LIEN
A claim against property for the amount of its due and unpaid taxes.

TERM
The period of time between the commencement date and termination date of a note, mortgage, legal document or other contract.

TITLE
The evidence of the right to or ownership in property. In the case of real estate, the documentary evidence of ownership is the conveyance document indicating in whom the subject property is vested. Title may be acquired through purchase, inheritance, gift or foreclosure of a real estate loan.

WRAP-AROUND
A form of secondary financing in which the face amount of the second mortgage (wrap-around) is equal to the balance of the first mortgage plus the amount of the new financing. Usually paid with seller financing.
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