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Adjustable Rate Mortgage (ARM)
A loan in which the interest rate is periodically adjusted based on the movement of a pre-selected index.

Repayment of a home loan through monthly payments of principal and interest that are calculated to payoff your loan at the end of a fixed period of time.

Annual Percentage Rate (APR)
The total cost of obtaining a loan including interest, discount points and loan fees, stated as a percentage and expressed as an annual rate.

A report prepared for the benefit of the lender that gives an opinion of the fair market value of the property, also known as property evaluation.

A loan with monthly installments of principal and interest that do not fully amortize the loan. The balance of the loan is due in a lump sum at specified date.

Cap (Interest Cap)
A limit on the periodic increase or decrease in the interest rate on an adjustable rate.

The consummation of a real estate transaction where title to a property is formally transferred, the note and security instruments are signed, and funds are disbursed.

Closing Costs
Expenses incurred to close on a home loan, including origination fee, discount points, title insurance, survey fees, and attorney fees, and pre-paid items, such as tax and insurance escrow payments.

Property owned by a borrower that is pledged to a lender in order to secure a loan.

Conventional Financing
Home loan financing that is not insured by FHA or guaranteed by the VA.

Conventional 15 or 30-Year Fixed Rate
The interest rate is the same for the entire 15 or 30 year home loan term. The term "conventional" means this home loan is not an FHA insured or VA guaranteed home loan program.

Money that is owed, which the borrower promises to repay.

Debt-to-Income Ratio
Ratio commonly used to determined qualification for a home loan. Compares total monthly obligations plus your home loan payments with your total monthly gross income.

Down Payment
The part of the purchase price of a home that the buyer pays in cash. The purchase price minus the down payment equals the loan amount, exlcusive of closing costs.

(Tax reserves and insurance reserves) A reserve is a sum of money set aside to be used later for a particular purpose. The mortgage lender usually requires the borrower to establish and maintain a reserve so that the borrower will have sufficient funds to pay general taxes and renew insurance when these items become due.

The difference between the market value of a property and the balance owed on that property’s home loans.

Fair Market Value
A price freely agreed upon by a willing buyer and a willing seller of a property, with neither party being under any compulsion to buy or sell.

Federal Housing Administration (FHA)
A federal agency that provides home loan insurance for residential loans and sets standards for construction and underwriting.

Fixed Rate Mortgage
A loan in which the interest rate remains the same for the entire term of the loan.

Gift Letter
A signed statement by a gift donor explaining that a cash gift used by the borrower to qualify for a loan does not have to be repaid.

Good Faith Estimate (GFE)
A document prepared by the lender that tells borrowers the estimated cost they will pay at or before closing. The lender must mail the GFE to the applicant within three business days after the application is received.

Hazard Insurance
Insurance that compensates the insured for loss on property because of physical damage by fire, wind, or other natural disaster.

A published interest rate such as the prime rate, London InterBank Offer Rate (LIBOR) or Treasury Bill. Lenders commonly use indexes to establish interest rates charged on adjustable rate mortgages.

Interest Rate
The charge for borrowing an amount of money for a certain period of time. Also known as the note rate.

A jumbo loan is a home loan in the amount of $240,100 or above.

Jumbo 15-or 30-Year Fixed Rate
The interest rate is the same for the entire 15-or-30 year home loan term. The term "jumbo" means the loan amount is $240,100 or above.

Monthly Housing Payment
The total monthly payment amount involved in paying back a home loan: principal, interest, taxes, hazard insurance, mortgage insurance, and assessments.

A pledge of real estate as security for the repayment of a loan. .

Mortgage Insurance (MI)
An insurance policy that insures a lender against a loss if a borrower defaults on his or her loan payments.

Mortgage Insurer
A mortgage insurance company that insures a lender against loss if borrowers default on their loan payments.

Mortgage Note
A promise issued in writing stating that money borrowed for the purchase of a home loan will be repaid at a specific interest rate over a given period of time.

The lender in a home loan transaction.

The borrower in a home loan transaction.

Origination Fee
The amount charged by a lender to a borrower for processing, underwriting and completing home loan documents, and distributing loan proceeds.

Point (Discount Point)
A one time charge, charged in lieu of interest, equal to 1% of the principal amount of a home loan.

Private Mortgage Insurance
An insurance policy written by a private company that insures a lender against certain losses if a borrower defaults on his or her loan payments.

Property Evaluation
A report prepared for the benefit of the lender that gives an opinion of the fair market value of the property, also known as appraisal.

A registered trademark of the National Association of Realtors that refers to a real estate agent who is a member of, or is affiliated with, the National Association of Realtors®.

The procedures related to the collection of home loan payments and the management of escrow accounts.

Evidence of the right to, or ownership of, property.

Title Insurance
A type of insurance that insures against loss brought on by defects in title to real estate.

Title Search
A search of public records to uncover the facts relating to the ownership of real estate.

Truth-in-Lending Act (TIL)
A federal law that requires lenders to disclose, in writing, certain credit terms and conditions of a home loan to the customer.

The process of analyzing information such as a borrower’s ability to repay a home loan, the acceptability of the property as security, and the loan rate and term to determine the risk of lending money.

Department of Veterans Affairs (VA)
An agency of the federal government. A VA home loan is a home loan that is guaranteed by the VA The VA home loan guarantee program encourages lenders to offer long-term, low down payment financing to eligible veterans.





Centre Square Funding Associates is an Equal Opportunity Housing Lender.