Credit Rating -
Borrowers are rated by lenders according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower.

Credit Report -
A report to a prospective lender on the credit standing of a prospective borrower. Used to help determine creditworthiness. Information regarding late payments, defaults, or bankruptcies will appear here.

Deed -
A legal document which affects the transfer of ownership of real estate from the seller to the buyer.

Default -
The failure to make payments on a loan.

Down Payment -
Money paid by a buyer from his own funds, as opposed to that portion of the purchase price which is financed.

Escrow Fee -
These costs cover the preparation and transmission of all home purchased-related documents and funds. Escrow fees range from several hundred to over a thousand dollars, based on the purchase price of your home. Not all states require funds to be put into escrow accounts for closing.

Equity -
The difference between the current market value of a property and the principal balance of all outstanding loans.

FHA Loan -
A government-backed mortgage loan supported by the US FHA and the Department of Housing and Urban Development (HUD).

Finance Charge -
The total dollar amount your loan will cost you. It includes all interest payments for the life of the loan, any interest paid at closing, your origination fee and any other charges paid to the lender and/or broker. Appraisal, credit report and title search fees are not included in the finance charge calculation.

Fixed-Rate Mortgage -
A mortgage where the interest rate does not change for the life of the loan.

Float -
Between the time of application and closing, a borrower may choose to bet on interest rates decreasing by electing to float. Floating is essentially choosing not to lock the interest rate. Since it is the borrower's responsibility to lock his or her rate before (or at) closing, choosing to float is considered risky and may result in a higher interest rate. Request information from your lender regarding lock procedures.

Foreclosure -
A legal procedure in which real estate is sold by the lender to pay a defaulting borrower's debt .

Good Faith Estimate -
An estimate of charges which you are likely to incur in connection with a loan closing.

Gross Monthly Income -
The total amount you earn per month, not counting any taxes or expenses. Often used in calculations to determine whether you qualify for a particular loan.

Hazard Insurance -
A form of insurance in which the insurance company protects the insured from certain losses, such as fire, vandalism, storms and certain other natural causes.

Housing Ratio -
The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

Index -
A published interest rate not controlled by the lender to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. The index and the interest rate linked to it may increase or decrease. The typical index values quoted on PMLC's web site are as follows:

All index values on PMLC's web site are expressed as an index name plus a margin as in "1TYB+2.75" which means a 2.75% margin above the One Year Treasury Bill Yield.

Interest Rate -
The percentage of an amount of money which is paid for its use for a specified time.