Adjustable Rate Mortgage (ARM):
A mortgage with an interest rate that changes over time in line with movements in the index. ARMs are also referred to as AMLs (adjustable mortgage loans) or VRMS (variable rate mortgages).
The length of time between interest rate changes on an ARM. For example, a loan with an adjustable period of one year is called a one-year ARM, which means that the interest rate can change once a year.
Repayment of a loan in equal installments of principal and interest, rather than interest-only payments.
Annual Percentage Rate (APR):
The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.
The limit on how much interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.
The portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.
A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties’ instructions and assumes responsibility for handling all of the paperwork and distribution of funds.
A loan insured by the Insuring Office of the Department of Housing and Urban Development; the Federal Housing Administration.