ARM or Adjustable Rate Mortgage - An ARM is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indexes.

Amortization - A regular and gradual repayment of a debt through installments that cover principle and interest.

Balloon Loan - At the end of the loan the remaining principle is due. Most of these loans have level payments until that date comes.

Buy Down - A temporary reduction of an interest rate and monthly payments for a fee.

Down Payment - An amount paid by the borrower that is the difference between the purchase price and the mortgage amount.

Earnest Money - A deposit given to the seller from the potential buyer at the signing of the sales agreement. This is to show that the buyer is serious about buying the property. If the sale goes through the amount paid is applied to the down payment. If the sale does not go through unless the purchase contract provides it the potential buyer will not get the deposit back.

Equity - The market value of the property minus the unpaid mortgage and any other liens or debts on the property.

Escrow Payment - In some states it's called "impounds." A portion of the borrower's payments are held in trust by the Lender to pay for mortgage insurance, hazard insurance, taxes, lease payments and or any other items that are due.

FNMA or Fannie Mae - A private company that is one of the major secondary market investors that purchase loans from depository institutions and mortgage companies.

FHLMC or Freddie Mac - Also know as Federal Home Loan Mortgage Corporation is a government sponsored agency. They also purchase loans from depository institutions and mortgage companies on the secondary market.

FHA or Federal Housing Administration - This federal agency insures first mortgages enabling lenders to loan higher percentages of sales prices. FHA loans generally cover 95% to 97% of the purchase price.

First Mortgage - A mortgage that holds first priority over any claims made on the property.

Foreclosure - A proceeding done in or out of court that will allow the sale of a property to satisfy a lien on it. This is done by removing all rights, title and interest of any owners on the property.

Hazard Insurance - Insurance purchased for wind storms, fire, and similar risks on a property.

HOA or Homeowners Association - A group of home owners in a specific area that have gathered to improve or maintain the quality of the same area.

Investment Property - A property that is not occupied by the owner (s) and is used for an income buy rent or is held in anticipation of income from the sale of it.

Investment Property - A property that is not occupied by the owner (s) and is used for an income buy rent or is held in anticipation of income from the sale of it.

Judgment - A debt or obligation arising from a judicial decision can be placed as a lien on a property.

Lien - An encumbrance for the payment of debt on a property.

LTV or Loan To Value - The percentage of the loan on the property in relation to the appraisal value.

CLTV or Combined Loan To Value - The ratio of all mortgage loans on a property to the appraisal value.

MI, PMI, or Mortgage Insurance - An Insurance policy paid for by the borrower to insure the lender against default of a mortgage. It is required by most lenders until 20% of the property is paid for.

PITI - An abbreviation for Principle, Interest, Taxes and Insurance. Can be paid in one payment for a mortgage.

Prepayment Penalty - A fee charge for paying off a mortgage earlier than a specified date. Adding one of these can lower the interest rate of a loan.

Primary Residence - Permanent residency, the majority of your residency is spent here.

Second Home - Non-permanent residency, home is not rented but is occupied by the owners occasionally, also known as a vacation home.