Annual Fee : A yearly cost charged in connection with maintaining a home equity line of credit.

Appraised Value : The estimate of a home's value made by a licensed professional appraiser.

Balloon Payment : A lump sum payment due at the end of a balloon mortgage.

Cap : The maximum rate to which a variable rate mortgage can increase during the life of the loan.

Closing : The process in which a borrower signs required documents to obtain a mortgage loan.

Closing Costs : Fees paid at a closing when obtaining a mortgage loan. Costs charged vary by company and depend  upon state and county laws.

Credit limit : The maximum amount that can be borrowed on a home equity line of credit or credit card.

Debt to Income Ratio : The relationship between your monthly income and your monthly debt payments; this is used as an indicator to determine your financial capability to handle additional debt.

Equity : The difference between the appraised value in your home and the amount of your mortgage balances.

Equity Loan : An installment loan or revolving line of credit that allows you to borrow money against the portion of your home that you already own (your equity). Generally the interest paid on equity loans is tax deductible.

Fixed Rate : An interest rate that does not change from the time you obtain a loan until it is paid in full.

Good Faith Estimate : A document provided at application and closing of installment equity loan that provides estimates of all closing costs associated with obtaining and closing a mortgage loan.

Index : The base rate for changes that a financial institution uses to determine how the APR or yield will change over a period of time. The prime rate is typically used for home equity lines of credit.

Interest : The sum paid for borrowing money.

Interest Rate : The rate or periodic charge paid to obtain a loan.

Loan to Value Ratio : The relationship between the appraised value of the property and the total amount of mortgage balances.

Margin : The fixed amount added to the index to determine the APR to be charged. Example: Prime + 2%

Origination Fee: A fee charged by the lender to cover the cost of processing and underwriting a mortgage loan.

Prepayment Penalty : An amount charged by some lenders if a loan is paid in full prior to the maturity date.

Title Search : A search of property records to determine legal ownership of a property and to insure there are no intervening liens, overdue taxes, or outstanding restrictive covenants which would adversely affect the value of the title.

Title Insurance : An insurance policy which the borrower and lender secure to guarantee against errors in the title search.

Underwriting : The process a lender goes through to decide whether or not to make a loan based on credit history, assets, ability to repay, etc.

Variable Rate : An interest rate that may change periodically in relation to an index. Rates could increase or decrease according to market conditions.