A mortgage glossary is a list of terms that are commonly used to help people when they are buying and managing real estate. The world of finance is full of specialized terms, so it can be helpful for those looking to get a mortgage to have a working knowledge of how a loan works.
While there are many terms in a mortgage glossary, ZipRealty.com lists several of the most important ones for potential borrowers to learn. An adjustable rate mortgage loan begins with an interest rate that is generally lower than other conventional loans for the first year, but after a certain amount of time expires, the interest rate increases as the loan continues. A fixed-rate mortgage is a type of loan that maintains the same interest rate for the duration of the mortgage. When shopping for a new home or piece of property, buyers often get a lock-in rate to ensure that the interest rate of a mortgage does not increase before they commit to purchasing the property.
Closing costs are mortgage fees associated with loan generation, escrow payments, title insurance and other third-party fees, and are often shared by both the buyer and the seller. Escrow is a third-party account that safely holds money and documents until the entire purchase of property is complete. Title insurance protects both the buyer and seller from potential defects in the property's title and pays attorneys and lawyers to fix any problems before the transaction is complete.