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     TERMS TO KNOW

     The mortgage industry is full of terms that are foreign to most people.
     The following glossary of terms should help you translate the mortgage
     language into English and help you make sense of the mortgage process.


    A-D  / E-H / I-P / Q-Z

     
     Appraisal:  An expert opinion on the value of a property

     Annual Percentage Rate:
          This is not the note rate applied for, but rather is a government 
          mandated formula that shows the cost of the loan in a yearly 
          rate by using the note rate plus certain other upfront costs

     ARM Loan:
          Adjustable Rate Mortgage. Mortgage characterized by an interest rate 
          that can adjust up or down at certain intervals based on a current index 
          (commonly the 1 year T-Bill) plus a preset margin. 

     Balloon:
          Mortgage characterized by level fixed payments for a predetermined 
          time frame followed by either a refinance or adjustment in interest rate

     Capital Gains:
          The tax paid upon certain types of real estate transactions. Contact 
          accountant for specifics (see links for details) 

     Cash to Close:
          The amount needed from the borrower at closing. Consists of down 
          payment, closing costs and prepaid items. This amount needs to be 
          in the form of a cashier check made payable to the buyer.

     Closing Date:
          Date stated on the purchase agreement that buyer and seller agree to 
          finalize or close the transaction

     Closing Costs:
          Various costs of setting up and funding the transaction - including 
          closing fee, title insurance, appraisal fees, underwriting fee, mortgage 
          registration tax etc.

     Condo/Town Home:
          Property types that usually have the following characteristics: they 
          are attached, have a homeowners association and dues, the outside 
          maintenance is taken care of by the association, and common areas 
          and amenities available to all owners in the association. 

     Conventional Financing: Standard, non-government financing.

     Credit Bureaus:
          Agencies that provide compilations of your credit history. The three 
          main credit bureaus are: Experian, Trans Union, and Equifax

     Credit Report:
          Report provided by the credit bureaus which shows the history, current 
          status, and profile of an individual

     Credit Scores:
          The number generated by the credit bureaus which is a numerical 
          representation of the subjects credit profile, range is from 450 on 
          the low side to 900 being the highest score possible.

     Debt Ratios:
          Ratio of debt to pretax income, often expressed as a front (housing 
          payment only) or back (all debt) ratios. Ex- $5000 monthly income, 
          $1400 housing payment, $1700 total debt would equal ratios of 
          28%/34%.

     Discount Points:
          One point equals one percent of the loan amount. Points are used to 
          lower the interest rate. One point does not equate into lowering the 
          interest rate one percent. Generally lowering the interest rate 1/8 
          will cost about 1/2 point, although this can vary based on daily pricing. 
          Typically is tax deductible. (see Links for accountant advice)

     Down Payment: Difference between loan amount and purchase price.