| Mortgage Glossary |
 Adjustable-Rate Mortgage (ARM) - A mortgage having an interest rate that can change at designated intervals based on a financial index.
Amortization - The gradual repayment of a mortgage by installments.
Appraisal - A professional assessment of the market value of a property.
Cash Reserve - Your Credit Union requires that buyers have sufficient cash remaining after closing to make the first two mortgage payments.
Closing Costs - Expenses (over and above the price of property) incurred by buyers and sellers in transferring ownership of a property.
Commitment Letter - A formal offer by a lender stating the terms under which it agrees to loan money to a home buyer.
Deed - The legal document conveying title to a property.
Equity - The difference between market value of a property and the owner's outstanding mortgage balance.
Escrow - The holding of documents and money (such as deposit) by a neutral party prior to closing. Also an account held by the lender into which a homeowner pays money for taxes and insurance.
Good Faith Estimate - A written estimate of closing costs provided by a lender within three days of applying for a loan.
Interest Rate Cap - A provision of an ARM that limits how much the interest rate can increase per adjustment period.
Lien - A legal claim against a property that must be paid when a property is sold.
Offer To Purchase - A formal document in which a buyer proposes to buy a property for a specified amount and under certain conditions. Acceptance by the seller creates a contract binding on both parties, subject to any contingencies.
Points - A one-time charge by some lenders to increase the yield of a loan equal to one percent of the loan amount and paid at closing.
Prequalification - The process of determining how large a loan a prospective homebuyer can qualify for; done before actually applying for the loan.
Principal - The amount originally borrowed. Also the amount of the monthly mortgage payment that reduces the outstanding balance of the mortgage.
Refinancing - The process of obtaining a new mortgage, usually at a lower rate, to repay and replace an existing mortgage.
Second Mortgage - An additional mortgage behind the first mortgage on a property based on the equity in the house.
Survey - A drawing showing the legal boundaries of a property.
Title - A legal document establishing the right of ownership.
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