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Adjustable Rate Mortgage (ARM, also called Variable Rate Mortgage)

A mortgage with an interest rate that is adjusted periodically to reflect changes in market conditions. Your mortgage payments are adjusted up or down as the interest rate changes.

Annual Percentage Rate (APR)

An interest rate that reflects the actual cost of a mortgage as a yearly rate. Because APR includes points and other costs, it's usually higher than the advertised rate. The APR allows you to compare different mortgages based on actual annual costs.


An estimate of the value of a home, made by a professional appraiser. The maximum amount of the mortgage is usually based on the appraisal.

Closing Costs (Settlement Costs)

All the charges associated with getting your mortgage, including the origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, charges for credit reports and other costs. Costs of closing usually add up to 3 to 6 percent of the mortgage amount.


The value of your home after the outstanding balance of any loans are subtracted.


A special third-party account set up by the lender in which your funds are held to pay for taxes and insurance. "Escrow" can also refer to a third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement.

Fixed Rate mortgage

A mortgage with an interest rate that stays the same (fixed) for the life of the mortgage. Monthly payments for a fixed rate mortgage are very stable.


The sum paid for borrowing money, which pays the lender's costs of doing business.

Origination Fee

The fee charged by a lender to prepare all the documents associated with your mortgage.

PITI (Principal-Interest-Taxes-Insurance)

Shorthand for the separate parts of a typical monthly mortgage payment.

Points (Loan Discount Points)

Points are prepaid interest on your mortgage, charged by the lender at the time of the closing. Each point is one percent of the loan amount - that is, 2 points on a $100,000 mortgage would be $2,000.


The expenses that are put into escrow at closing, usually including real estate taxes, insurance, and interest.


The amount of debt, not including interest, left on a loan; also the face amount of the mortgage.

Private Mortgage Insurance (PMI)

An insurance policy the borrower buys to protect the lender from non-payment of the loan. PMI policies are usually required if you make a down payment that is below 20% of the appraised value of the home.

Title Insurance

An insurance policy that insures you against errors in the title search, essentially guaranteeing your and your lender's financial interest in the property.


© 2011 Loans by Gina All rights reserved.
Senior Loan Officer, Mortgage Capital Associates, Inc.
4610 200th Street SW Suite D, Lynnwood, WA 98036
cell: 425.766.5408, office:425-275-0633, eastside: 425-285-3451
tel: 425.275.0600, fax: 425.275.0649
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