Adjustable Rate: An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly

Appraisal: A fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.

Closing Costs: Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Debt Service: The total amount of credit card, auto, mortgage or other debt upon which you must pay.

Discount Points (or Points: The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).

Due on Sale: A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.

Equity: The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.

Encumbrance: A claim against a property by another party which usually affects the ability to transfer ownership of the property.

Fixed Rate: An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.

Prepayment Penalty: A fee paid to the lending institution for paying a loan prior to the scheduled maturity date.

Loan to Value Ratio (LTV): A ratio determined by dividing the sales price or appraised value into the loan amount, expressed as a percentage. For example, with a sales price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would be 80%. Loans with an LTV over 80% may require Private Mortgage Insurance.