Type of mortgage loan with an interest rate which changes. Arms typically have a fixed period- usually 1, 3 or 5 years- then begin to adjust on a regular basis. This means the rate can increase above the initial rate and the payments may change as well.

Any home loan that is not a standard fixed-rate mortgage with a typically qualifying term. This includes ARMs, as well as loans where the qualifying rules may have been relaxed. Some jumbo mortgages (larger loan amounts) are also considered alternative mortgages.

The process of gradually repaying a debt with regularly scheduled payments over a period of time. Most fixed rate mortgage amortize over the term of the loan.

Amount a lender charges to process your loan application documents. These are common with mortgage loans and many lenders will apply the fees towards your closing costs. Application fees are generally non-refundable.

An evaluation of the market value of your home made by a professional. This analysis is based on the sales price of similar houses in your area, the condition of your home and any extra features which may add or take away value compared to similar homes.

The amount charged to deliver a professional opinion about how much a property is worth. For a standard house or condominium, this fee is usually between $300 and $500.

Any physical property that is owned and has a value in money. This can include cash or other items readily converted into cash, such as investments as well as real estate and land.

A calculation used by lenders to determine a borrower’s ability to repay his or her debts. This is calculated by taking the sum of housing expenses (mortgage payment, taxes and insurance) and all other monthly debts (credit cards, car payments, student loans, and other monthly payments) divided by monthly gross (pre-tax) income. Traditionally, lend [..]

The amount that remains in an account after debt or payments are subtracted and credit or deposits are added.

A type of mortgage where the amortization schedule will not cancel out the debt by the end of the mortgage term. Instead, a large payment (see “Balloon Payment”) of the remaining principal balance must be paid. This usually occurs about five to seven years after the loan has been taken out.