Also known as a variable-rate loan, an ARM usually offers a lower initial rate than a fixed-rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market. Indexes used for ARMs include the LIBOR index and the Treasury index. ARMs also have caps or a maximum and minimum that the interest rate can change at each adjustment period.

The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.

Paying off a loan over the period of time and at the interest rate specified in a loan document. The amortization of a loan includes the payment of interest and a part of the amount borrowed in each mortgage payment.

The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.

Amortization ScheduleProvided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases.

How much a loan costs annually. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

The appraisal is the estimated market value as currently stipulated for any piece of property. Typically, an “appraiser” determines this value through comparables in your community. This is among the most common terms for selling your home.

An increase in the market value of a home due to changing market conditions and/or home improvements.

A homebuyer’s agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Selling a house “as-is” means that you will not be making any repairs or correct any problems with your property upon sale.

In the intense world of offers and price negotiations, sometimes a home seller may have multiple offers. A “back-up” offer is when you have a second offer as back-up in case your first offer happens to fall through for some reason.

A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage contains an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.

Any home seller would love this situation, as it typically involves two or more buyers competing for your property by offering higher bids, as in an auction. This is among the most common terms for selling your home.

An agency managing both the buying and selling of property for clients. Typically, in this case, a brokerage firm would represent you in the sale of your property.

This would be the real estate agent representing the “buyer” of your property, negotiating contracts straight through closing.

When you’re in the “closing,” that means the transaction is almost complete. The deed is delivered, documents are signed, and payment has been sent. Learn about closing costs for home buyers.

The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.

A form that provides the final details of the selected mortgage loan. It includes the loan terms, projected monthly payments, and lists all fees and other costs to get the mortgage (closing costs). The lender is required to give the borrower the Closing Disclosure at least three business days before closing on the mortgage loan.

A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.

Comparable: When evaluating the value of your property, looking at other similar homes and seeing how they’ve been priced on the market would determine how you’re going to price yours. The similar homes out there are considered “comparables.”

Competitive Market Analysis (CMA): A CMA is a very detailed evaluation of specific homes listed or sold on the market based on location, style, and amenities similar to your property. Your agent completes this analysis to come up with an accurate price point. This is among the most common terms for selling your home.

Something given up or agreed to in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs.

If there are certain requirements you expect from a buyer before a transaction is completed and a contract is bound, that would result in what’s called a “contingency” offer. It can go both ways, buyer or seller.

The ability of a person to borrow money, or buy good by paying over time. Credit is extended based on a lender’s good opinion of the person’s financial situation and reliability.

A record of credit use comprised of a list of individual consumer debts and a record of whether or not these debts were paid back on time or “as agreed.” Credit institutions have created a detailed document of your credit history called a credit report.Credit ReportA document used by the credit industry to examine your use of credit. It provides information on money that you’ve borrowed from credit institutions and your payment history.Credit ScoreA computer-generated number that summarizes your credit profile and predicts the likelihood that you’ll repay future debts.

A request for a copy of your credit report. An inquiry occurs every time you fill out a credit application and/or request more credit. Too many inquiries on a credit report can hurt your credit score.

The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts such as credit cards.

The legal document transferring ownership or title to a property

Failure to fulfill a legal obligation. A default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non-monetary. For example, when leasing a car, the lessee is usually required to properly maintain the car.

A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

Be sure to let any buyer know of all federal, state, county, and local requirements of buying, owning, renting, or improving on a home, or anything else of relevance in the industry. It’s simply called “disclosure.”

A portion of the price of a home, usually between 3-20%, not borrowed and paid up front.

When a buyer offers money in “good faith” the moment an offer is made, it’s held in a trust account until closing commences. Also known as an Earnest Money Deposit.This is among the most common terms for selling your home.

The deposit to show that you’re committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.

The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

Remember what I said about that “trust account” in the previous definition? That’s what that is. This is among the most common terms for selling your home.

Your agent would be designated as the only one allowed to sell your property.

Understand that a represented buyer or seller has what’s called a “fiduciary relationship” with his or her agent, trusting that agent to act in his or her best interests in the prospect of buying your property.

A mortgage with an interest rate that does not change during the entire term of the loan.

Understand that a represented buyer or seller has what’s called a “fiduciary relationship” with his or her agent, trusting that agent to act in his or her best interests in the prospect of buying your property.

The income you earn in a month before taxes and other deductions. It may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances.

The percentage of your gross monthly income that goes toward paying for your housing expenses.

The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.

This is also known as a “rent-to-own” option. If you’re renting out your property to a tenant, you may give the buyer the option to purchase the property, transferring title, deed, and mortgage over

A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.

This involves a broker finding a buyer for your property. You would pay a commission with the listing agreement just for the broker to find a buyer as well.

Fees paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.

A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.

The “assessed” value, which is a determination by the local authority, and the “appraised” value, which is a determination based on comparables in the market, are different from the market value, as this value applies to what the property would cost under “normal market conditions.” Some may consider it the ‘fair value.’

The current value of your home based on what the purchaser would pay. An appraisal is sometimes used to determine market value.

A loan using your home as collateral. In some states the term mortgage is also used to describe the document you sign [to grant the lender a lien on your home]. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage is usually the purchase price of the home minus your down payment.

Broker: An independent finance professional who specializes in bringing together borrowers and lenders to complete real estate mortgages.

Lender:  The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.

When multiple brokers “share” a listing, that’s what the MLS is.

Your take-home pay after taxes. It is the amount of money that you actually receive in your paycheck.

A formal bid from the homebuyer to the home seller to purchase a home.

When the seller’s real estate agent opens the seller’s house to the public. You don’t need a real estate agent to attend an open house.

When a contract has been agreed upon and completed (but the transaction has not taken place, yet), the deal is considered “pending.”

1% of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.

A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

A letter from a mortgage lender that states that you’re pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.

The amount of money borrowed to buy your house or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

Insurance needed for mortgages with low down payments (usually less than 20% of the price of the home).

A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses

Real Estate agent: The hired person representing the buyer or seller in the purchase or sale of a property.

Realtor: A real estate agent who is a member of the National Association of Realtors. These agents abide by a code of ethics set by the NAR and are often top-performing agents.

A real estate agent goes by many names. Most buyers and sellers refer to him or her as their salesperson, agent, broker, Realtor, or some pet name that is best left to the imagination. The monikers are all interchangeable.

Getting a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

You could ask for the county to do this, as it typically involves measurement of lot lines, dimensions, and positioning, just to determine how much property you have, even outside the actual structure. Encroachments and easements are also determined, such as pathways and additions outside the lot lines.

The terms of sale are the important details included within a purchase agreement drafted and executed by the seller and the buyer in a real estate sale. In some cases there will be items of personal property that will be included in the sale, such as appliances or lawn decorations.

Affidavit of title: This is a written statement essentially certifying that the recipient of this document possesses the property by title. It includes everything from your marital status to relevant dates.

The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land.

Title Insurance Insurance that protects lenders and homeowners against legal problems with the title.

When you have an interested buyer who makes an offer and you either counteroffer (and buyer accepts) or you just accept, leading to closing or escrow, that sums up everything involved in a real estate “transaction.”

When you stipulate this in a listing, you ensure that a buyer has the exclusive dibs on a contract for the purchase of the house. No buyer can make a better offer in the hopes of stealing the bid. A buyer may ask that you stipulate this on a contract.

The process a lender uses to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

A standard mortgage application your lender will ask you to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Your buyer may want to do a final tour of the property just to check for any defects or problems that were missed in an initial showing. That’s what the “walk-through” is.

Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.