Appraised Value - An opinion of value reached by an appraiser based upon recent sales information for similar properties, the condition of the property and the neighborhood’s impact on future property value.

Appraisal - An opinion of value reached by an appraiser based upon recent sales information for similar properties, the condition of the property and the neighborhood’s impact on future property value. The cost of the appraisal is part of closing costs.

Assumability - A loan feature that allows the loan to be transferred from the seller to the purchaser of a home with the same terms and conditions, subject to lender approval.

Average Daily Balance - This is the method by which most credit cards calculate the payment due. The average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle. The average daily balance is then multiplied by a card's monthly periodic rate, which is calculated by dividing the annual percentage rate by 12.

Balance Sheet - A document showing the financial situation--assets, liabilities, and net worth--of a company at a specific point in time.

Balance Transfer - The process of moving an unpaid debt from one issuer to another. Credit Card issuers sometimes offer teaser rates to encourage balance transfers coming in and balance transfer fees to discourage them from going out.

Balloon Mortgage - A short-term, fixed-rate loan with low payments for a set number of years and a large balloon payment of the remainder of the principal due at the end of the term. Assignment - The transfer of property rights by one person, the assignor, to another, the assignee.
Bi-weekly Mortgage - A payment plan under which the borrower pays one half of a monthly payment every two weeks. This often results in a faster pay-off of a mortgage.

Billing Cycle - The number of days between the last statement date and the current statement date.

Caps (payment) - Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change. Since they do not limit the amount of interest the lender is earning, payment caps may cause negative amortization.

Cash Available - Your housing affordability depends on the amount of money you have for the down payment, closing costs and a cash reserve. The more you can come up with, the less you will have to borrow.

Cash Out - A refinance for more than the balance of the current mortgage. The excess money taken out reduces the borrower’s equity. Cash required to close - Money needed by borrower to cover down payment, closing costs, Cash reserves, and prepaids.

Cash Reserve - Funds that the borrower will have remaining after all expenses (down payment, closing costs & prepaid expensis) of the transaction have been paid.

Closed-Account Fee - A fee charged for shutting down an account. Sometimes charged if the account is closed before a certain time period has passed.

Closing (settlement) - The conclusion of a transaction. In real estate, closing includes the delivery of a deed, the signing of notes and security instruments, and the disbursement of funds necessary to the sale or loan transaction.

Closing Agent - Neutral third party appointed to act as a custodian for documents and funds during the transfer of property from seller to buyer. Depending on local law and custom, this could be an attorney, escrow agent or title company. Closing Costs - Fees incurred in a real estate or mortgage transaction paid by borrower and/or seller at the closing of the transaction.

Cosigner - A person who cosigns a credit application with the primary applicant. The cosigner agrees to be liable for any balance that the primary applicant allows to go into default.

Consumer Credit Counseling Service (CCCS) - A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time.

Contingency - A condition which must be satisfied before a contract is legally binding--before a sale can close.

Credit Bureau - A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union. It is a good idea to check your credit report to know where you stand and correct any errors.

Credit Insurance - A policy that pays off the card debt should the borrower lose his job, die or become disabled.

Credit Rating - An expression of the borrower's creditworthiness based upon present financial condition and past credit history.

Credit Report -A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual. A fee is usually charged.

Current PITI - An abbreviation for a monthly payment that includes principal, interest, taxes and insurance. In mortgage lending it is common for the monthly mortgage payment to include not only the principal and interest payment on the loan, but an escrow amount for real estate taxes and hazard insurance as well.

Deed - Legal document by which title to a property is transferred from one owner to another. The deed contains a description of the property and is signed, witnessed, and delivered to the buyer at closing.
Deed of Trust - Document creating a lien on a property as security for the payment of a debt. In some states, a mortgage is used instead.

Default - Failure to meet legal obligations in a contract, including failure to make payments on a loan. A mortgage is generally considered to be in default when a payment is 30 days past due

Deferred Interest - Amount added to the balance of a loan when monthly payments are insufficient to cover the interest incurred. This results in negative amortization.

Delinquency - Failure to make required payments on time.

Document Preparation or Review- This fee covers the expenses associated with the process of preparing the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement.

Down Payment - In a home purchase, the difference between the purchase price and the mortgage amount.

Down Payment Percent - The down payment percentage is calculated by dividing the amount you plan on putting down on the purchase of a home by the selling price.

Earnest Money - Deposit made by a buyer toward the down payment as evidence of good faith when the purchase agreement is signed.

Equal Credit Opportunity Act (ECOA) - Federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Escrow/Attorney/Title - A neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or "closing." You will either use an escrow company, an attorney or a title company depending on which state you reside in.

Fixed-Rate Mortgage - A mortgage whose interest rate does not change for the life of the loan. Payments are also fixed.

Flood Check - If the house is close to a source of water, a survey is conducted to determine whether a property is in a flood zone. A fee is charged.

Floor - The minimum interest rate payable on an adjustable-rate mortgage.

Grace Period - If the credit card user does not carry a balance, the grace period is the interest-free period of time a lender allows between the transaction date and the billing date.The standard grace period is usually between 20-30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. If you have a balance on your credit card you have no grace period.

Gross Monthly Income - Total monthly income before taxes or expenses are deducted. Used in the loan origination process to calculate borrower’s ability to make payments on a loan.

Hazard Insurance - A policy that protects the insured against loss due to fire or certain natural disasters in exchange for a premium paid to the insurer. Also known as Home Owner’s Insurance or fire insurance.

Household Income - The total income of all members of a household.

Impound (or Reserves) - Portion of a borrower's monthly payments held by the lender to pay for taxes, insurance, and other items as they become due.Lending Guidelines - Every loan program has different guidelines. Guidelines are used to meet Federal, State and Local laws and enforce minimum requirements by the lender. Guidelines ensure that prospective borrowers won't purchase a home that they won't be able to afford.

Interest Rate - The fee charged for money lent. Under the Truth in Lending Act it must be disclosed as Annual Percentage Rate (APR).

Introductory Rate - The low rate charged by a lender for an initial period to entice borrowers to accept the credit terms. After the introductory period is over, the rate charged increases.

Joint Credit - Issued to a couple based on both of their assets, incomes and credit reports. If both parties have good credit, applying jointly generally results in a higher credit limit, but makes both parties responsible for repaying the debt.

Late Payment Fee - Charge to customer whose monthly payment has not been received as of the due date or stated deadline for payment as shown on the billing statement. This fee can a flat per-transaction fee or a percentage of the amount of the cash advance.

Loan Amount - The actual amount borrowed from the lending institution including any financed fees, debt consolidation, etc.

Loan Balance The current outstanding balance (the amount you owe) on your present mortgage loan.
Lock or Lock In - A lender's guarantee of an interest rate and related points for a set period of time, usually between loan application and loan closing. This protects borrower against rate increases during that time. Monthly Income - Based on your earnings and debt, lenders calculate your approximate borrowing limit. Many lenders believe that the total of mortgage payments, property taxes, hazard insurance, etc. should not exceed 28-30% of your monthly gross income.

Minimum Payment - The minimum payment you can make to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the card holder's ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance.

Monthly Periodic Rate - The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12.

Notary - An official authorized by law to attest and certify certain documents by his or her hand and official seal.

Original Term - The term of a home loan is the number of years the home loan is amortized for. Home loans are generally amortized over 15, 20 or 30 years.

Over-the-limit Fee - A fee charged for exceeding the credit limit on the card.

Pay-down Program - Steps for paying down a credit card or mortgage balance. First, make at least the normal monthly minimum payment by the due date. Then, two weeks later, send half the amount again, and two weeks later, half again. Repeat the half payments on the two-week schedule until the balance is paid.

Payment (P&I) - Your monthly mortgage payment, including principal and interest, but excluding tax and insurance payments.

Points (or Discount Points) - Money paid to a lender at closing in exchange for a lower interest rate. Each point is equal to 1% of the loan amount.

Prepaid Expenses - Taxes, insurance and assessments paid in advance of due dates.

Processing - The preparation and documentation of a mortgage loan application for underwriting.

Property Value - LTV or Loan to Value Ratio refers to the relationship between the unpaid principal balance of the mortgage and the property's appraised value (or sales price if it is lower).

Rate - The annual rate of interest on a loan.

Recording - The act of entering documents concerning title to a property into the public records.

Survey - A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any improvements.

Tax Savings - This is the amount of money you save in income taxes. You save this money because in most cases the interest you pay on your home loan is tax deductible! (Ask your tax advisor).

Term - The number of years the home loan is amortized for. Home loans are generally amortized over 15, 20 or 30 years.

Termite Report - A report that results from an inspection by a professional to determine if the property has termites. A fee is charged.

Title Insurance - The process of determining the history of the ownership of a property in order to determine if the seller has legal ownership in the property they re selling. A fee is Charged.

Underwriting - The analysis of risk, the determination of the appropriate loan amount, and the setting of loan terms and conditions, based on the borrower's creditworthiness and the value of the real property that will secure the loan.

Walk-through - A final inspection of a home to check for problems that may need to be corrected before closing.

Wire Transfer Fee - Loan proceeds are typically transferred via electronic wire. This is the transaction fee that is charged by the bank to execute the wire.