buyer's glossary

Adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust the interest rate periodically on the basis of changes in a specified index.

Amortization Schedule
A timetable schedule showing the amount of each payment applied to interest and principal and the remaining balance after each payment
is made.

Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage, and loan origination fee (points).

Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.

Biweekly Payment Mortgage
A mortgage requiring payments every two weeks instead of the standard monthly payment. The result for the borrower is a substantial
savings in interest.

Broker
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Certificate of Title
A statement provided by an abstract company or attorney stating that the title to real estate is legally held by the current owner.

Closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents, paying closing costs, and transfer of the
deed to the property.

Collateral
An asset (such as a car or a home) that guarantees the repayment of a loan.

Commission
The fee charged by a broker or agent for providing services related to a real estate transaction such as marketing the property, bringing
the parties together; and negotiating a purchase contract or loan. The commission is usually paid by the seller.

Deed
The legal document conveying title to a property.

Earnest Money Deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.

Real Estate Agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

REALTOR®
A registered collective membership mark which identifies real estate professionals who are members of the NATIONAL
ASSOCIATION OF REALTOR® and subscribe to its strict Code of Ethics.

Title Search
A check of the title records to ensure that the seller is the legal owner of the property and that there is no liens or other claims outstanding.

Mortgage
A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage Insurance
A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage.

Truth in Lending
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage
rate and other charges.

Underwriting
The process of evaluating a loan application to determine the risk involved for the lender.