MortgageMortgage Glossary

Alternative Financing - A mortgage for individuals with less than perfect credit, undocumented income or any non-standard financial criteria.

ARM (Adjustable Rate Mortgage) - A mortgage which allows the lender to adjust the interest rate in accordance with a specified index and margin periodiclly, as agreed to at the inception of the loan.

Balloon Mortgage - A mortgage in which the payments do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term. Some balloon payment loans allow the borrower to convert to a different loan program at the time the final lump sum is due.

Bridge Loan - A short-term loan used to provide funds to close on another residential property when the current property has not been closed.

Construction Loan - A loan used for funding the construction of improvements or building(s) on property.

Conventional Mortgage - A mortgage not obtained under a government insured program (such as FHA or VA).

Equity Loan - A long-term loan secured by residential property where the funds are used to purchase another residential property.

FHA Loan (Federal Housing Administration) - A mortgage which is partially insured by FHA, usually assumable, and may have reduced down payment requirements compared to conventional mortgages.

First Mortgages - Loans secured by real estate used to purchase or refinance residential property where there is no other loan secured by that property.

Fixed Rate Mortgage - A mortgage in which the interest rate and payment is fixed over the entire loan term.

Government Mortgage - A mortgage loan where a government or quasi-government agency insures or guarantees a portion of the loan based on certain conditions.

Jumbo Mortgage - A mortgage which is larger than the legislated purchase limits of Fannie Mae and Freddie Mac (currently $240,000).

Pre-Approvals - A full loan commitment that is obtained prior to identifying the property.

Second Mortgage - Loans where residential property is used as the collateral. There is already an existing first mortgage, or the second mortgage is done in tandem with the first mortgage.

VA Loan (Veteran's Administration) - A mortgage where the Veteran's Administration provides assistance to veterans of the United States Armed Forces by partially guaranteeing loans to veterans with low or zero down payments.

Subject to qualifications.