Adjustable Rate Mortgage Loans(ARM)

Also known as the variable rate mortgage, an ARM is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. An adjustable rate is based on a margin plus and index. The margin is fixed for the life of the loan. The index will adjust based on the market or economic conditions. As a result, the interest rate on your loan will rise and fall with increases and decreases in overall interest rates. If interest rates rise, you can expect to see an increase in what you pay monthly as well. The ARM often comes with an interest rate cap, which limits the amount by which the interest rate can change. Though they do have the potential to raise your monthly payments, an adjustable-rate-mortgage can make a big difference in lowering your monthly payments...

Amortization Term

The length of time required to amortize, or repay, the mortgage loan, expressed as a number of months.


A home appraisal is a written analysis of the estimated value of your property. A qualified licensed appraiser who has training, experience and insight into the market place prepares the home appraisal report. It demonstrates approximate fair market value based on recent sales in your neighborhood and is required to purchase or refinance your new home or property. A property appraisal like this is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the...


The dollar amount of the loan that is left to be paid. It is equal to the loan amount minus the sum of all prior payments towards the principal.

Balloon Mortgage

A balloon mortgage is a loan with a fixed-rate and fixed monthly payments for a set number of years followed by one large final balloon payment for all of the remainder of the principal balance. Typically, the balloon payment may be due at the end of five, seven, ten or fifteen years. Borrowers with balloon mortgage loans may have the right to refinance or pay off the loan before or at the time the balloon payment is due depending on the contractual agreement of the mortgage...

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