The mortgage industry is continuously changing - it's a challenge just to keep up. New regulations, government programs and terms are always being created. Therefore, the first step in understanding the refinancing process is to learn the language!

ADJUSTABLE RATE MORTGAGE (ARM) - A loan that allows the lender to adjust the borrower's interest rate and payments at prescribed times and sometimes with prescribed limits. Lower interest rates are customary.

AMORTIZED LOAN - A loan which is paid off in equal installments during its term.

ANNUAL PERCENTAGE RATE - The actual interest rate the borrower pays when all the costs of obtaining credit are included.

APPRAISAL - A report made by a qualified appraiser setting forth an opinion of estimate of value. The term also refers to the process by which the estimate is obtained.

APPRAISED VALUE - An estimation of property value made by a qualified expert.

APPRECIATION - An increase in the value of a property. Appreciation may be the result of an increased demand for property, any improvements or additions made, improvements to the neighborhood, etc.

BALLOON MORTGAGE - A mortgage with periodic installments of principal and interest that, at the end of such a period, do not fully amortize the loan. The balance of the mortgage due is usually paid in a lump sum at a specified date, usually at the end of the term of such periodic installments.

CLOSING - The process that brings a loan into legal existence, including the signing of all loan documents, their delivery to the appropriate parties, and the disbursing of at least some of the loan funds. More....