Appraisal Fee
This is charged to pay an appraiser to research and assess the market value of the property on which a mortgage is being placed. Instead of being charged for separately, this fee may be charged for as part of a mortgage application fee.

Annual Percentage Rate (APR)
A term defined in section 106 of the Federal Truth in Lending Act (PL 90-321; 15 USC 1606), which reflects on an annualized basis the charges imposed on the borrower to obtain a loan (defined in the Act as "finance charges"), including interest, discounts and other costs.

Caps
A limit on the amount by which the payment may increase or decrease, or on the amount by which the interest rate may increase or decrease.

Closing Costs
Fees paid to affect the closing of a mortgage, such as an origination fee, discount point, title insurance fees, survey fees, and escrow's fees, etc.

Conforming Loan
A loan in which the amount borrowed is less than or equal to $300,700

Credit Report Fee
This is charged to pay a credit service bureau to provide the lender with a report detailing a borrower's credit history. Instead of being charged for separately, this fee may also be part of a mortgage application fee.

Equity Loan
A loan in which the amount borrowed is less than or equal to $300,700

Equity Line of Credit
A combination of a line of credit and equity loan secured by real property. A maximum loan amount is established based on credit and equity. A mortgage is recorded against the potential borrower’s property for said maximum loan amount. The potential borrower has the right to borrow, as needed, up to the amount of the credit line.

Escrow
Delivery of something of value by a grantor to a 3rd party for delivery to the grantee upon the happening of a contingent event. In some states, all instruments necessary to the sale are delivered to a 3rd party, with instructions as to their use.

Fixed Rate Mortgage
A mortgage in which the interest rate and payments remain the same for the life of the loan.

Hybrid Adjustable-Rate Mortgages (ARM)
Borrowers might have a fixed rate of 5.5 percent for the first five years, for example, and then the rate would adjust yearly thereafter for another 25 years. This loan is known as a "5/1". The length of the fixed rate period varies.

Interest-Only Loans
The borrower pays only the accrued interest for several years, without chipping away at the principal. It's best for people who expect their home values to hold up and who expect to sell well before paying off the loan.

Jumbo Loan
A loan in which the amount borrowed is greater than $300,700

Loan to Value Ratio
The ratio of mortgage amount to appraised value or sales price of real property. Used by lenders to determine maximum loan amounts as set by law.

Mortgage Insurance
In the event that the loan you are requesting from the lender exceeds 80% of the market value of the property being mortgaged, the lender will generally require you to pay for obtaining a mortgage insurance policy. This protects the lender if you default on your loan and the equity in the property is not sufficient to cover any losses the lender incurs as a result of that default. Depending on the amount by which the "loan to value ratio" exceeds 80%, the first year's premium generally ranges from .35% of the loan amount to 1% of the loan amount. The first year's premium, which is generally higher than subsequent premium amounts, is sometimes paid at time of closing.

Negative Amortization Loan
the borrower has the option of paying a minimum monthly payment that is less than an interest-only payment, but the loan principal will increase. A homeowner could end up owing more than originally borrowed. This can be a good option for those who want to conserve cash.

No Asset Verification Loan
This type of loan is similar to a No Income Verification Loan except it is use by borrowers who do not wish to or are unable to verify their assets as opposed to verifying their income. As with No Income Verification loans, the interest rate and/or costs may be slightly higher than normal to reflect the higher degree of risk involved in loaning to borrowers without verifying their assets. Here, such risk is often offset to some degree by borrowers who have significant verifiable incomes or who are only borrowing a small percentage of a property's value.

No Income/No Asset Verification Loan
This type of loan is similar to a No Income Verification Loan and a No Asset Verification Loan except it is use by borrowers who do not wish to or are unable to verify their income and their assets. Once again, the interest rate and/or costs for such loans may be slightly higher than normal to reflect the higher degree of risk involved in loaning to borrowers without verifying their income or assets. Such risk is often offset, to some degree, by borrowers who have a significant history of paying loans of a similar type as the one being sought or who are borrowing only a small percentage of a property's value.

No Income Verification Loan
These types of loans are available to borrowers who, for one reason or another, do not wish to or are unable to verify their annual income. An example of such borrowers includes those who obtain revenue from sources they do not wish to divulge or those that receive all or a portion of their income in cash. While available from some lenders as fixed or adjustable rate loans, the interest rate and/or costs may be slightly higher than normal to reflect the higher degree of risk involved in loaning to borrowers whose incomes have not been verified. Such risk is often offset to some degree by borrowers who have significant verifiable assets or who are borrowing only a small percentage of a property's value.

Points
These are fees charged by lenders that help lenders offset the costs lenders incur by providing you with mortgage funds. One point equals 1% of the loan amount. In a typical transaction, a borrower pays from 0 -2 points to the lender. The number of points is directly related to the interest rate charged by the lender. The more points a borrower pays, the lower the interest rate and vice versa.