Interest that you have accumulated on a loan but not yet paid to your lender. Mortgage interest accrues daily or weekly depending on your loan type, and is based on your loan’s principal balance and mortgage rate.

With this type of mortgage, your interest rate will change over time. This change is tied to the national economy, and it’s something you’ll be made aware of ahead of time so you can prepare for any changes in your monthly payment. Additionally, many adjustable-rate mortgages have a cap, meaning there’s a limit on how high your interest rate can go up based on what your rate was when you signed. The terms of your mortgage may also limit how frequently your rate can change. Adjustable-rate mortgages contrast with fixed-rate mortgages. Neither type is inherently better than the other, so make sure you consider all available options with your Mortgage Advisor before deciding which option to go with.

The word “amortize” means to pay something off gradually over a period of time. In the context of a mortgage, amortization refers to the distribution of charges you’ll repay throughout the lifetime of your mortgage. Everything from your principal to taxes, insurance and APR is calculated as part of your monthly bill, so you’ll amortize, or pay back, everything you owe with a single payment every month.

If you have a credit card or car loan, you likely know the basic definition of APR: it’s the percentage of interest you’re charged to borrow money. However, when it comes to mortgages, the APR is a bit more complicated. The interest rate you’re quoted for your loan is the percentage of interest you’ll pay for the amount you borrow. The mortgage APR takes this interest rate percentage and adds a few other things to it, including points and other charges or fees.

The appraisal process is an official step in the homebuying process that determines whether the final sale price of a home is realistic. Appraisal prevents lenders from spending more on a home than it’s actually worth. Licensed appraisers perform this process, but they aren’t always perfect at doing their jobs. If you think the appraisal on the home you’re buying was incorrect, you may be able to order another appraisal.

Sometimes, a house is appraised at a value that’s less than what the buyer offers to pay. This is increasingly common in seller’s markets that see buyers competing with each other to win the deal. You can read more about appraisal gaps in our News & Insights blog.

Appreciation is the increase in the value of a property over time. Home improvements or changes in the housing market can cause the property’s value to change.

Property taxes are based on the assessed value as defined by your local government. The agencies responsible for assessing value (typically a county or city assessor’s office) make regular assessments, which means that your property taxes may change based on the market value of comparable homes in your local community.

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

Also known as a mortgagor, a borrower is an individual who qualifies for and receives funds through a loan. The borrower is obligated to repay the loan in full under the terms of the loan.

A person who is licensed to handle property transactions and who acts as a go-between for buyers and sellers.

Real estate market conditions can vary from place to place, and they also change over a time. In some cases, economic conditions can impact the real estate market nationwide. In any of these cases, the “real estate market” broadly refers to how expensive homes are, and how much inventory there is. In a situation where there are plenty of houses to go around and not many people are buying, sellers will likely need to price their homes strategically to be more appealing. This is a buyer’s market, meaning that the buyer will likely get a better deal than the seller. By contrast, a seller’s market favors the people selling rather than buying.

Mortgages allow you to borrow money to pay for most of the costs associated with buying a home, but there are other fees, like down payments and closing costs , that aren’t covered by a home loan. This means you’ll need to have cash (liquid assets ) on hand to pay what your mortgage doesn’t cover. You’ll want to know how much you need to pay so you can liquidate assets as needed.

When you refinance with a cash-out mortgage, you get cash back from the equity in your home. The amount is determined by the difference between your new loan and the remaining balance on your current mortgage. The cash-out can be used for anything from home improvements to college tuition.

There are a number of fees associated with buying a home, including appraisal fees , property taxes, points , lender origination fees, broker fees and more. These are all due at closing, which is why they’re referred to as closing costs. The exact fees you can expect to pay at closing will depend heavily on your unique situation, so make sure to ask your Mortgage Advisor about this well in advance so you can prepare. Know that you may be able to negotiate with the seller to pay some of the closing costs, especially things like a real estate agent’s fee. You may be able to have your closing costs covered as part of your mortgage, but if you can include them with your other cash to close expenses, it’s best to do so. That way, you won’t pay interest on the closing costs in addition to everything else.

For a mortgage loan to be conforming, it must meet the specific criteria that allow Fannie Mae and Freddie Mac to purchase the loan.

A number generated through statistics systems that evaluate your credit. Scores are based on various factors including loan repayment, outstanding debt, credit cards, bankruptcies, collections, and judgements.

Monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.

A deed is a legal document that signifies ownership. When you hold the deed to something, including your house, that shows you own the property in question. Homebuyers receive the deed to their new homes at signing.

As with certain other loan types, like car loans, a down payment is an amount the buyer must pay up front at the time of purchase. In most cases, this payment must be made from your own liquid assets , meaning that you have to have cash on hand to cover this expense (in addition to other cash to close expenses). Depending on the loan type and your circumstances, you may be able to use funds gifted to you for your down payment. If you do get a gift to pay this cost, you’ll need to meet certain conditions, including having a formal gift letter. Some other loan types don’t require a down payment, or a lower down payment than the standard 20%. These loans may require that you have private mortgage insurance (PMI).