Amortization - The gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest.

Business Day – The part of a day during which most businesses are operating, usually from 9 am to 5 pm Monday through Friday. Often, this term is defined in the relevant document as a day other than a Saturday, Sunday or national holiday.

Credit Score – A credit score is a number that reflects your credit risk level, typically with a higher number indicating lower risk. It is generated through statistical models using elements from your credit report; however, your score is not physically stored as part of your credit history on the credit file. Rather, it is typically generated at the time a lender requests your credit report, and is then included with the report viewed by the creditors. Your credit score changes as the elements in your credit report change.

Collateral – An item of economic value, such as real estate, pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default.

Deed - A legal document conveying title to a property.

Default - Failure to make required payments on a timely basis or to comply with other conditions of an obligation or agreement.

Escrow Agent – A third party who oversees the exchange of funds and property between a buyer and seller. When purchasing a property, the escrow agent acts as a custodian of the buyer’s funds and ensures that the appropriate funds are paid at the closing of the loan and that the property is appropriately conveyed.

Escrow Account – An account that is held by a lender or an escrow agent. Funds are placed into the account for a specific purpose. When the funds are needed for that purpose, they are paid out of the escrow account. When you have a mortgage, a certain amount of your payment normally goes into an escrow account, out of which your property taxes and insurance payments are made.

FHA – This is an acronym for the Federal Housing Administration. The FHA is a government agency whose primary purpose is to insure residential mortgage loans.

FICO Score – This is an acronym for Fair Isaac Credit Organization. Fair, Isaac and Company, Inc. is a developer of data management systems and services multiple industries such as financial and retail services. The company employs various tools to help businesses worldwide use data to make faster, more profitable decisions in areas such as marketing and accepting customers. (www.fairisaac.com)

Foreclosure - The legal process by which an owner's right to a property is terminated, usually due to default. Typically involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt and other liens (if any).

Gross Earnings – An individual's taxable income before any adjustments are made.

Homeowners Association – A homeowner association is comprised of two or more homeowners who belong to a membership organization for the maintenance of commonly owned real estate and improvements. It can range from a simple duplex up to a huge development with thousands of homes, condominiums and townhouses that maintain marinas, golf courses and other extensive facilities (often improvements like a tennis court or swimming pool for the development where the house is located).

Fixture – Personal property that is considered a part of the real property because it has been affixed in a manner that to remove it would cause damage to the property.

Indemnification – One party’s agreement to compensate someone else for loss or damage.

Lease – A contract granting use or occupation of property during a specified time for a specified payment.

Loan Origination Fee – A fee charged by a lender for processing a loan application, typically calculated as a percentage of the mortgage amount.

Mortgage - A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien (the mortgage) on the property as collateral for the loan.

Mortgage Broker – An individual or company who brings borrowers and lenders together for the purpose of loaning money. The mortgage broker might also negotiate with the lender to help the borrower get a better deal on the mortgage loan.

Mortgage Insurance – Insurance protecting a lender against loss from a mortgagor's default. Mortgage insurance is issued by the FHA or a private mortgage insurer. If the borrower defaults on the loan, the insurer would pay the lender the lesser of the loss incurred or the insured amount.

Neighborhood Association – A neighborhood association is a voluntary membership organization that deals with social, political, zoning and other issues which typically affect the members' properties and usually does not maintain commonly owned property.

Personal Property - Any property, such as furniture, clothing and consumer electronics, other than real estate property.

PITI – Acronym for principal, interest, taxes, and insurance, the four components of a mortgage payment.

Pre-Approved – A loan is “pre-approved” when a potential borrower has passed a preliminary credit screening. A pre-approval from a lender shows that a potential borrower has a solid credit history and is qualified for a mortgage loan of a specified size. In a competitive market, a pre-approval letter can provide greater negotiating clout with a seller, as other potential buyers may not be pre-approved and the seller can be more comfortable that you will be able to complete the purchase.

Pre-Qualified – A potential borrower is “pre-qualified” when a lender completes a cursory review of the potential borrower’s financial situation.

Principal - The amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). This term is also used to describe that part of a monthly payment that reduces the outstanding balance of a mortgage.

RESPA – This is the acronym that stands for the Real Estate Settlement Procedures Act. This federal law is a consumer protection law that was originally implemented in 1974. The law covers one to four-family properties and requires, among other matters, that your lender provide you with advance notice of all of your closing costs prior to closing. The law also establishes guidelines for escrow account balances and prohibits "kickbacks" to parties for referring business associated with the loan.

Submortgage – An arrangement in which a mortgage lender pledges a mortgage as collateral for his/her own loan.

Underwriting – The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.