Equity.  The difference between the value of a home and what is owed on it. Escrow.  The handling of funds or documents by a third party on behalf of the buyer and/or seller. Federal Housing Administration (FHA).  A federal agency which insures mortgages that have lower downpayment      requirements than conventional loans. Fixed Rate Mortgage.  A mortgage whose interest rate remains constant over the life of the loan.  The payments are not     necessarily level.  (See Graduated Payment Mortgage and Growing Equity Mortgage). Fixed Schedule Mortgage.  A mortgage whose payment schedule for the life of the loan is established at closing.  The      payments and interest rate are not necessarily level. Graduated Payment Mortgage (GPM).  A fixed-rate, fixed-schedule loan which starts with lower payments than a level      payment loan; the payments rise annually over the first 5 to 10 years and then remain constant for the remainder of the loan.       GPMs involve negative amortization. Growing Equity Mortgage (Rapids Payoff Mortgage).  A fixed-rate, fixed-schedule loan which starts with the same      payments as a level payment loan; the payments rise annually, with the entire increase being used to reduce the outstanding      balance.  No negative amortization occurs, and the increase in payments may enable the borrower to pay off a 30-year loan in      15 to 20 years, or less. Hazard Insurance.  Protection against damage caused by fire, windstorm, or other common hazards.  Many lenders require      borrowers to carry it in an amount at least equal to the mortgage. Housing Finance Agency.  A state agency which offers a limited amount of below-market-rate home financing for low- and      moderate-income households. Index.  The interest rate or adjustment standard which determines the changes in monthly payments for an adjustable rate loan. Infrastructure.  The public facilities and services needed to support residential development, including highways, bridges,      schools, and sewer and water systems. Interest.  The cost paid to a lender for the use of borrowed money. Joint Tenancy.  A form of ownership by which the tenants own a property equally.  If one dies, the other would automatically      inherit the entire property. Level  Payment Mortgage.  A mortgage whose payments are identical for each month over the life of the loan. Mortgage Broker.  A broker who represents numerous lenders and helps consumers find affordable mortgages; the broker      charges a fee only if the consumer finds a loan. Mortgage CommitmentA formal written communication by a lender, agreeing to make a mortgage loan on a specific      property, specifying the loan amount, length of time and conditions. Mortgage Company (Mortgage Banker).   A company that borrows money from a bank, lends it to consumers who want to      buy homes, then sells the loans to investors. Mortgagee.  The lender who makes a mortgage loan. ( Typically the Bank ).  Mortgagor. The person taking out or receiving the loan from the mortgagee. ( Typically You). Mortgage Loan.  a contract in which the borrower's property is pledged as collateral and which can be repaid in installments      over  a long period.  The mortgagor (buyer) promises to repay principal and interest, to keep the home insured, to pay all taxes      and to keep the property in good condition. Mortgage Origination Fee.  A charge by a lender for the work involved in preparing and servicing a mortgage application      (usually 1% of the loan amount). page 2 of 3 2355 BELMONT CENTER DR.  SUITE  104, BELMONT, MI. 49306