Adjustable Rate Mortgage (ARM).  A loan whose interest rate is adjusted according to movements in the financial market. Amortization.  A payment  plan by which a borrower reduces a debt gradually through monthly payments of principal and      interest. Annual Percentage Rate (APR).  The annual cost of credit over the life of a loan, including interest, service charges, points,      loan fees, mortgage insurance, and other items. Appraisal.  An evaluation to determine what a piece of property would sell for in the marketplace. Appreciation.  The increase in the value of a property. Assessment.  A tax levied on a property or a value placed on the worth of a property by a taxing authority. Assumption.  A transaction allowing the buyer of a home to assume responsibility for an existing loan on the home instead of      getting a new loan. Balloon.  A loan which has a series of monthly payments (often for 5 years or less) with the remaining balance due in a large      lump sum payment at the end. Binder.  A receipt for a deposit paid to secure the right to purchase a home at terms agreed upon by the buyer and seller. Buy down.  A subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan. Cap.  A limit to the amount an interest rate or a monthly payment can increase for an adjustable rate loan either during an      adjustment period or over the life of the loan. Certificate of Occupancy.  A document from an official agency stating that the property meets the requirements of local      codes, ordinances, and regulations. Closing.  A meeting to sign documents which  transfer property from a seller to a buyer.  (Also called settlement.) Closing Costs.  Charges paid at settlement for obtaining a mortgage loan and transferring real estate title. Conditions, Covenants, and Restrictions (CC and R)The standards that define how a property may be used and the      protections the developer has made for the benefit of all owners in a subdivision. Condominium.  A home in a multi-unit complex; each purchaser owns an individual unit, and all the purchasers jointly own      the common areas, such as the surrounding land, hallways, etc. Conventional Loan.  A mortgage loan not insured by a government agency (such as FHA or VA). Convertibility.  The ability to change a loan from an adjustable rate schedule to a fixed rate schedule. Cooperative.  A form of ownership in a multi-unit complex, the purchasers own shares of the entire complex rather than      owning individual units. Credit Rating.  A report ordered by a lender from a credit bureau to determine if the borrower is a good credit risk. Default.  A breach of a mortgage contract (such as not making monthly payments). Density.  The number of homes built on a particular acre of land.  Allowable densities are usually determined by local      jurisdictions. Down payment.  The difference between the sales price and the mortgage amount on a home.  The down payment is usually      paid at closing. Due-on-Sale.  A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or      transfer of the property.  A mortgage with a due-on-sale clause is not assumable. Earnest Money.  A sum paid to the seller ( usually held by the Selling Office in their non-interest bearing escrow account )      to show that a potential purchaser is serious about buying. Easement.  Right-of-way granted to a person or company authorizing access to the owner's land; for example, a utility      company may be granted an easement to install pipes or wires.  An owner may voluntarily grant an easement, or in some cases,      be compelled to grant one by a local jurisdiction. page 1 of 3 2355 BELMONT CENTER DR.  SUITE  104, BELMONT, MI. 49306