Adjustable Rate Mortgage (ARM) A loan whose interest rate is adjusted according to movements in the financial market.

Amortization A payment plan by which a borrower reduces a debt gradually through monthly payments of principal and interest.

Annual Percentage Rate (APR) The annual cost off credit over the life of a loan, including interest, service charges, points, loan fees, mortgage insurance, and other items.

Appraisal An evaluation to determine what a piece of property would sell for in the marketplace.

Appreciation The increase in the value of a property.

Assessment A tax levied on a property or a value placed on the worth of property by a taxing authority.

Assumption A transaction allowing the buyer of a home to assume responsibility for an existing loan on the home instead of getting a new loan.

Balloon A loan which has a series of monthly payments (often for 5 years or less) with the remaining balance due in a large lump sum payment at the end.

Binder A receipt for a deposit paid to secure the right to purchase a home at terms agreed upon by the buyer and seller.

Buydown A subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan.

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