Glossary of Home Mortgage Terms

80/20 LOAN - This is a type of loan where 80% of the loan is taken out with one lender and 20% is taken out with a different lender so that the risk of the mortgage for the house is split between them. So if you go to Credit Union of New Jersey for your loan, they may only want to finance 80% of your home, then you can turn to nationally known Chase Bank to finance the other 20%.

ARM - Adjustable Rate Mortgage - this is a mortgage without a fixed interest rate that can change over time.

CLOSING - This is the final process for selling a home from one entity to another. It usually involves several fees and paperwork.

EQUITY - The value of a house compared to how much is owed on it to the mortgage company. For example; a house that is valued at $200,000 in Scranton but only has $160,000 left on the mortgage is said to have $40,000 worth of equity.

ESCROW - This is the period between the sale of a home from one person (entity) to another. When a home is in the middle of negotiations, and paperwork it is said to be in escrow. Escrow is usually managed by an independent 3rd party business.

FINANCE COMPANY - this is the bank or lending institution that is giving money for the purchase of the home.

FIXED INTEREST - The interest rate that is paid on the home can be fixed or variable (ARM). A fixed interest rate is set at the time of the purchase of the home and does not change over the life of the mortgage.

MORTGAGE - a loan used to purchase a house or land. Usually the interest rate for a mortgage is fixed but there are Adjustable Rate Mortgages available as well.

REFINANCE - the process of seeking a refinance of your home loan through your current lender or through an entirely new lender (receiving a loan from them to pay off your current mortgage-holder

VA LOAN - A loan available to military veterans and active-duty servicepersons including the New Jersey National Guard. The loan is guaranteed by the federal government and therefore easier to obtain on less-than-perfect credit.

After looking through these terms, look through the steps to low mortgage rates, and use them to benefit yourself.