adjustable rate -A mortgage loan that allows the lender to change the interest rate periodically in conjunction with a specified index. The interest rate applied to the loan payments varies as interest rates in the market changes.

amortization -The reduction in the amount of principal over time. An amortization schedule indicates how much principal remains unpaid after each payment.

appreciation - The increase in a home's value over time.

assumption- Taking over the borrower's responsibility on a existing loan when buying the home mortgaged under that loan.

closing -The formal transfer of property ownership from the seller to the buyer. At this time all funds are paid and dispersed and a deed of ownership is delivered to the buyer.

closing costs -Costs incurred in closing a loan.

Conventional Loan -A non-government insured loan.

CRV- Certificate of Reasonable Value. Issued by a VA showing the appraisal value of one home or a group of homes with an agreement to finance these homes after completion to qualified buyers.

disclosure statement -Statement disclosing all costs incurred by the buyer in the transaction.

earnest money -Money deposited by the buyer to back up an offer to purchase. can be forfeited if the buyer decides not to buy after the sales contract is signed by the seller.

equity -The difference between the market value of the home and the amount owed on the mortgage loan.

FHA -The Federal Housing Administration , a federal agency that insures home mortgage loans. Loans insured by the FHA allow the buyer to borrow a higher percentage of the cost of the home, thereby reducing the down payment.

financing- The funds necessary to purchase a home, consist of all mortgage loans plus any down payment made by the buyer.

fixed-rate-loan - A mortgage loan for which the interest remains unchanged for the life of the loan.

legal description -identification of property: lot, block, plan, and address.

loan letters -Information provided to lender by applicant to assist in qualifying for a loan.

M. I. P.- Mortgage Insurance Premium- applicable to FHA

mortgage commitment -Lender's pledge to provide a mortgage loan pending approval of the loan application, at a specified interest rate usually granted at time of application and is good for a limited time while the loan is in approval process.

principal -The amount a loan is reduced by a payment