Pre-Approval
An evaluation that determines if the borrower qualifies for a home loan and the maximum amount that they are eligible for.
Annual Percentage Rate (APR)
The cost to the borrower at a yearly rate. APRs include mortgage insurance and the loan origination fee.
Escrow
An account established by the mortgage company to pay for property taxes and insurance during the time of the mortgage.
Private Mortgage Insurance (PMI)
When borrowing a loan, if your down payment is less than 20% of the purchase price, mortgage companies will require that you purchase private mortgage insurance to protect them (the lender) if you go into foreclosure.
Adjustable Rate Mortgage (ARM)
Instead of having one annual percentage rate, your rate could adjust during the time of your loan depending on the economy and interest rates. In some economic conditions, adjustable rate mortgages are a good choice, other times, not.
Fix Rate Loan
The annual percentage rate stays the same throughout the entire time of the loan.
Lien
A contract that holds property as security if payments aren’t made. If you don’t pay, your house is taken from you as payment.