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Abstract of Title

A summary of the property's title history. Based on information found in public records, it is used to list the property's transfers of ownership, and to determine if there are any liens or defects that must be cleared before the sale.

Adjustable Rate Mortgage

A mortgage in which the interest rate periodically adjusts based on a pre-selected economic index, such as Treasury bill or prime rates. The initial interest rate, or "teaser rate," is fixed for a given number of years, and is usually lower than rates for traditional fixed rate mortgages — making monthly payments lower as well. When the interest rate begins to adjust, mortgage payments may go up or down along with it, at intervals specified in the ARM product disclosure.

Adjustment Date

The lower initial rate of an ARM can increase purchasing power and enable you to consider a more expensive home than might be possible with a fixed rate mortgage. But keep in mind — the interest rate and monthly payments may increase when the rate begins to adjust.

Adjustment Period

The amount of time between the adjustment dates for an adjustable rate mortgage (ARM). Many ARMs have a one-year adjustment period, meaning that the interest rate will adjust (go up, down, or stay the same) every year. But there are ARMs with six-month and even three-year adjustment periods.


A feature of a property that increases the attractiveness or value, but is not necessarily essential to the property's use. Amenities include features such as gardens, pools or beautiful views.


The gradual reduction of your loan balance through scheduled periodic payments. For mortgage balances, payments are generally made every month. A portion of the payment goes to the loan principal and a portion goes to the interest. An amortization schedule shows the balance after each payment is made.

Amortization Term

The amount of time you have to repay the mortgage loan. It is usually expressed in months. For example, the amortization term for a 30-year mortgage is "360 months" (12 mo/yr x 30 yrs).

An abbreviation for "Principal, Interest, Taxes and Insurance" — the four charges that make up your monthly mortgage payment.

A percentage of your loan amount, paid at closing. For instance, on a $90,000 loan amount, 1 point = 1 % or $900. You may have the option to pay points to buy down (reduce) your interest rate. Alternatively, in exchange for a higher rate, the lender may pay points to offset your closing costs. These are called negative points. See Discount Points.

Annual Percentage Rate

The cost of your mortgage loan expressed as a yearly rate. The components that are used to formulate the APR are, Note Rate — The stated interest rate, Points, Per Diem Interest - The daily interest charged on your loan from the day of closing to the end of the month, Other Applicable Fees — PMI, etc, The APR does not affect your monthly payment — amortization is computed on the note rate.The cost of your mortgage loan expressed as a yearly rate.


An estimate of the current market value of the home you intend to buy, prepared by a professional appraiser. The estimate is based on the property's appearance, style and construction quality, as well as on the value of similar properties, or comparables that were recently sold in the area.

Appraisal Fee

Your lender may require that you get an appraisal, a professional analysis of your property and neighborhood to determine the approximate value of your home. The appraisal fee is the amount charge for the appraisal. The amount that you're eligible to borrow is based largely on your property's appraised value.


An increase in the value of your property because of positive events, such as favorable changes in market conditions or enhancements made to the property.


See Adjustable Rate Mortgage.


A local area tax charged against a property for a specific purpose, such as a sewer or street signage.


Anything of monetary value you own outright, including property, bank accounts, stocks and mutual funds. A review of assets is an important part of the mortgage application process.