ADJUSTABLE RATE MORTGAGE (ARM), is a mortgage which adjusts its interest rate periodically. The period between adjustment can be as short as 1 month or as long as 1 year. There are mortgage loan programs that have an initial fixed rate periods of 3, 5 or 7 years. Then they becomes ARM after the initial fixed rate periods.

APPRAISALS are a professional person’s opinion of the value of the home to determine the fair market value for many purposes, especially for lending. All lenders usually require a current appraisal from a licensed reputable appraiser prior to granting a loan.

AMORTIZATION is the calculation of the amount of your monthly payment in such a way that you will pay off the principal and interest of your mortgage loan in an exact number of payments. Most mortgage loans are typically amortized in 10-30 years. That means that they are paid off in exact amount of years requested. Some mortgage loans have a short fixed rate period such as 3, 5 or 7 years but they could be amortized over 30 years to keep the payments low. That means that the monthly payment is calculated as if it was a 30-year mortgage loan, but the mortgage loan could be ended in 3, 5 or 7 years. When the mortgage loan ends, the borrower may have the option to convert it to some other terms as defined in the mortgage loan documents, or just pay off the balance, this is called a balloon payment

(APR) ANNUAL PERCENTAGE RATE is the actual rate of a mortgage loan taking the lender’s fees into consideration. The idea is for comparing the real per dollar cost of the mortgage loan. For mortgage loans that have no lender fees, the note rate is the same as the APR. For mortgage loans that have lender fees, we subtract these fees from the principal amount of the loan and calculate your payment rate against the adjusted amount, which we call the APR.

Another factor that affects the APR is the year term of the mortgage loan. The shorter the year term of a mortgage loan, the higher the APR will be. All lenders may not calculate the APR exactly the same way, even though they are required to do so. Using our Web site, you may obtain year to year comparisons of different mortgage loans. We even calculate the year to year APR's for you to compare. This is more exact than using a single APR figure based on the year term of a mortgage loan. If you compare APR's from other lenders, make sure that you know what assumptions are made for the calculations. (SEE "GOOD FAITH ESTIMATE")

CLOSING COSTS are the initial expenses you paid to obtain your mortgage loan. In our calculation, we consider only the mortgage loan origination fee and other closing fees as your closing cost. Pre-paid interest (discount points) and other recurring fees are not considered closing costs even though you pay them at the time you obtain your mortgage loan.

CURRENT MARKET VALUE is the value of your house if sold today. Usually the price you purchased at, adding 4% per year to the sales price would be a good start. The exception is, if you made capital improvements to the home, such as add on, or if the neighborhood has changed for the better or worse. However, your house's current market value is the appraised value, and this is usually determined by a State Licensed Appraiser.

DEFAULT VALUE requires the web site visitor to answer questions as requested, there are often supplied answers to the questions. The visitor may accept these "default values" as their own or if the answers do not apply to the situation, they may change them accordingly.

DISCOUNT POINTS (one discount point equals one percent of the loan amount) are fees charged to reduce the interest rate below the current interest rate market price, or may be additional fees charged by the Investor because of a risk factor.

FIXED RATE MORTGAGES, Besides fixed rate mortgages that pay off in 15 or 30 years, there are mortgages that amortized in 30 years with an initial fixed rate period of only 3, 5 or 7 years. After the fixed rate period, the mortgage needs to be paid off or become adjustable rate.

GOOD FAITH ESTIMATE (GFE) is a written document that is to be provided to you as required by law, the GFE sets out all of the charges you will incur in obtaining your loan. Always review your Good Faith Estimate prior to signing any type of agreement with any Lender.

LOAN ORIGINATION FEE is the Lender’s charge for their services as a percentage of the loan amount. One point equals one percent of the loan amount. The loan origination fee is a part of the closing costs. The closings costs consist of additional fees and the loan origination fee is one of those fees. (Please see Closing Costs)

NO CLOSING COSTS NO DISCOUNT FEES: The lender is willing to pay for all the closing expense of your mortgage loan in exchange for a higher interest rate.