Closed-end credit
Any loan in which the funds borrowed, plus any finance charges, is expected to be repaid in full over a definite time.

Closing Costs
Fees paid at a mortgage closing. Fees may vary, but some examples include title insurance, attorney fees, appraisal fees, recording fees and taxes.

Collateral
Property that is used to secure a loan or other credit and that becomes subject to seizure on default.

Co-signer
Another person who signs for a loan and assumes equal liability for it.

Share Insurance Fund (SIF)
Insurance afforded to depositors at certain banks, which guarantees against loss of funds in excess of the FDIC insurance.

Equity
The value of your home after the outstanding balance of any loans is subtracted. For example, if the borrower's home is worth $100,000 and the borrower owes $ 60,000 on the mortgage loan secured by the home, the borrower's equity is $ 40,000 or 40% equity in the home.

Escrow Account
An account established with a mortgage lender in which a portion of the monthly payment funds is held to pay for taxes and insurance when they become due.

Federal Deposit Insurance Corporation (FDIC)
An agency of the federal government that insure accounts at most commercial banks and mutual savings banks. The FDIC also has primary federal supervisory authority over insured state banks that are not members of the Federal Reserve System.

Fixed Rate Mortgage
A mortgage with an interest rate that stays the same for the life of the loan.

Good faith estimate
A document provided at application that provides estimates of all costs associated with obtaining and closing a mortgage loan.

Interest
The amount the lender charges to lend you money, or the amount the depository institution pays you for funds you keep on deposit.

Lien
An encumbrance on property that acts as security for the payment of a debt.

Mortgage insurance
Insurance that protects the lender if the homebuyer defaults on the mortgage payments. Typically, Private Mortgage Insurance (PMI) policies are required if your down payment is less than 20% of the purchase price of the home.

Open-end credit
A line of credit that may be used repeatedly up to a certain limit.

Origination fee
The fee charged by a lender to prepare all the documents associated with your mortgage.

Points
Prepaid interest on your mortgage, charged by the lender at the time of closing, that allows the borrower to obtain a lower Interest Rate. Each point equals one percent of the loan amount.

Portfolio Lender
A financial institution that will not sell your loan to another institution. They will service your loan for its full term or until you sell your property.

Pre-approval
A conditional commitment by a lender based on all standard documentation except a property appraisal and title search.

Pre-qualification
A process in which the loan officer calculates the housing-to-income ratio and the total debt-to-income ratio to determine an approximate maximum loan amount.

Principal
The amount borrowed, not including interest.

Transaction account
An account, which allows transfers to third parties, such as a checking account or NOW account at a bank or other depository institution.

Truth-in-lending disclosure
Federal law requires that the lender must provide this document to the homebuyer within three business days after loan application. This disclosure gives details of the mortgage payments along with the corresponding Annual Percentage Rate and finance charges.

Variable Interest Rate
An interest rate that may fluctuate over the life of the loan. The Interest Rate is often tied to an index that reflects changes in market rates of interest. Limits (or caps) are often placed on the level to which Interest Rates can vary.