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Balloon Mortgage
A loan that behaves like a fixed-rate mortgage for a set number of years (usually five or seven) and then must be paid off in full in a single "balloon" payment. Balloon loans are popular with those expecting to sell or refinance their property within a definite period of time.

Broker
An individual in the business of arranging funding or negotiating contracts for a client but who does not loan money himself. A broker usually charges a fee or receives a commission for his services.

Buy-Back Agreement
An agreement specifying conditions under which the seller agrees to repurchase the property usually for a stated price and within a stated time limit. 

Buyers Market
A market in which there are more houses for sale than there are potential buyers. Housing prices are usually driven lower, and buyers stand to get a better deal.

Caps
A set percentage by which an ARM may adjust each pre-set period as described in the mortgage note.  Caps are usually quoted as two numbers as in 2/6. The first number indicates how much a loan may change at each adjustment period while the second number indicates the percentage a loan may adjust over its lifetime. 

Loans like the 3/1 and 5/1 adjustable which have an initial fixed period are quoted with 3 numbers as in 3/2/6 which would mean that the first adjustment may be as much as 3%, subsequent adjustments are capped at 2% each, and the lifetime cap is 6%. 

Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (i.e., mortgage payment, maintenance, and utilities).

Certificate of Eligibility
Written authorization issued by a local municipal authority that permits occupancy of a newly constructed home.

Certificate of Occupancy
Written authorization issued by a local municipal authority that permits occupancy of a newly constructed home.

Certificate of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the property's current market value.

Closing
Also referred to as settlement.  The process of finalizing the purchase or refinance of a property, including but not limited to, signing papers, disbursing money, and preparing the deed and transfer of ownership.

Closing Costs
Fees paid by the borrower when a property is purchased or refinanced. These typically include a loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, deed recording fee, and credit report charge. 

Collateral
Personal property pledged as security for a debt.  Collateral for a mortgage is usually the property.

Commitment
A written letter of agreement detailing the terms and conditions on which the mortgage company will lend money to finance a home.

Condominium
Real estate that includes the separate ownership of a specified unit with undivided interest in the ownership of the common elements which are owned jointly with the other condominium unit owners.

Construction Loan
A short term loan for funding the cost of construction. The lender advances funds to the builder as the work progresses.

Credit Report
A report to a prospective lender on the credit standing of a prospective borrower which is used to help determine creditworthiness. Information regarding late payments, defaults, or bankruptcies will appear on the report.