DOWN PAYMENT - The difference between the loan amount and the sales price of the home you are purchasing. This is measured in a percentage; for example, a 3% down payment on a $70,000 home would be $2100.

EQUITY - The owner's interest, or the amount of cash the owner has, realized, paid in or invested in real estate.

ESCROW PAYMENT - The portion of a borrower's monthly payment that is set aside by the lender in an escrow account to pay the taxes, hazard insurance, mortgage insurance, ground rents and other special items as they come due.

FHA LOAN - A loan that is insured by the Federal Housing Authority. This type of loan is geared toward providing moderate to low income families mortgages, and is subject to the qualifying guidelines set forth by the Federal Housing Authority.

FIXED-RATE MORTGAGE - The type of loan where the interest will not change for the entire term of the loan.

GOOD FAITH ESTIMATE - Provides a breakdown of the estimated closing charges.

HOME EQUITY LOAN - A loan under which a property owner uses his or her residence as collateral and can then drew funds up to a prearranged amount against the property.

INTEREST RATE - The percentage of interest charged on the amount of money borrowed. This rate will vary slightly from lender to lender, and will vary according to the type of mortgage chosen (30 year fixed, 3 year adjustable, etc.). Now is an excellent time for mortgage interest rates, as 1996 has ushered in consistently low rates that are in fact the lowest in over 30 years!

LOAN-TO-VALUE RATIO (LTV) - The ratio, expressed as a percentage, of the amount of a loan (numerator) to the value or selling price of the property (denominator). Usually, the higher the percentage, the greater the interest charged. More...