Annual Percentage Rate (APR) - A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as most other charges.Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans. It will normally be higher than your note rate.

Appraisal - This is an estimation of the value of your home based on the sale price of comparable homes in your immediate neighborhood. If you have owned your home for less than 12 months, the sale price is used for the value.

Closing Costs - Home loans always have closing costs. These include, but are not limited to escrow, title, processing, underwriting and recording.

Credit Scores - Credit scores are assigned by all three credit bureaus: Experian (TRW), Transunion, and Equifax. They range from a low of 350 to a high of 800+. Your credit score is affected negatively by a number of things. The biggest ones, in order of importance, are; Bankruptcy, Foreclosure, collections, and charge-offs. Then come 90,60, and 30 day late payments. Less important but still affecting your score are high credit card balances, large amounts of credit available, newly opened accounts and inquiries.

Debt-to-Income ratio - This is the ratio of your new total monthly payments (after paying off old loans with a new loan) divided by your gross monthly income. Normal guidelines allow a maxium on 40% to 50%.

Escrow - A neutral third party who carries out the instruction of both the buyer, seller, and lender to handle all the paperwork of settlement or closing. Escrow can also refer to an account held by the lender into which the home buyer pays money for tax or insurance payments.

Equity - This is the difference between the market value of your home and any loans against it. Example: if you have a loan that appraises at $150,000 and you have a first mortgage valued at $75,000 and a second at $25,000, you have $50,000 of equity .

Fixed Rate Mortgage - The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage.

Foreclosure - A legal process by which the lender or seller forces a sale of a mortgaged property because the borrower has not met the terms of the loan.

Loan-to-Value-Ratio - The ratio that results from the sum of all loans against a home divided by the appraised values.

Note - A written promise to repay a certain sum of money on specified terms. You will sign this at the final closing with the title company.

PITI - Principal, Interest, Taxes, Insurance. Your monthly payment.

Points - A point is a fee charged by lenders. Each point is one percent of your loan value.

PUD - Planned Unit Development. These are detached homes in one community. They pay a monthly fee for upkeep of common areas, landscaping, community pool, etc.

Pre-Payment Penalty - Most loans have a pre-payment penalty. During this period, if you pay this loan off, you will pay an additional fee. It is part of your payoff. You can pay the loan down without a penalty, but if it is paid completely off, there is a fee.

Title Insurance - A policy issued by the title company, which insures a home buyer and/or lender against errors in the title search. The cost of the policy is usually a function of the loan amount.

Prepaid Finance Charges - These are certain charges made in connection with the loan and which must be paid upon the close of the loan. These charges are defined by the Federal Reserve Board in Regulation Z and the charges must be paid by the borrower. These charges include: Interest Per day, and amounts charge to establish escrows. They are not inclusive of: Loan Origination fee, Points, Private Mortgage Ins., tax service fees, appraisal fee and credit report fees.

Finance Charge - The amount of interest, prepaid finance charge, and certain insurance premiums (if any) which the borrower will be expected to pay over the life of the loan.

Amount Financed - The loan amount applied for less the prepaid finance charges. Prepaid finance charges can be found on the Good Faith Estimate.

Total of Payments - This figure represents the total of all payments made toward principal, interest and mortgage insurance (if applicable) over the life of the loan.

Payment Schedule - The dollar figures in the Payment Schedule represent principal, interest, plus Private Mortgage Insurance (if applicable) over the life of the loan. These figures will not reflect taxes and insurance escrows or any temporary buydown payments contributed by the seller.