Adjustable-rate mortgage (ARM)s
A mortgage or home equity loan in which your interest rate and monthly payments may change periodically during the life of the loan, based on the fluctuation of an index. Lenders may charge a lower interest rate for the initial period of the loan. Most ARMs have a rate cap that limits the amount the interest rate can change, both in an adjustment period, and over the life of the loan. Also called a variable-rate mortgage.

Amortization
The gradual reduction in the principal amount owed on a debt. During the earlier years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal, unless there has been negative amortization.

Amortization table
A time table or schedule to give you a breakdown of your monthly payments into principal and interest. You can use this schedule to figure out the amount of principal you'll repay during your mortgage term.

Amortization term
The amount of time required to amortize (or pay off) the loan. The amortization term is expressed in months. For example, for a 15-year fixed-rate mortgage, the amortization term is 180 months.

Annual fee
An annual amount you pay for having an open line of credit.

Annual adjustment cap
A limit on how much the variable interest rate on a loan can increase or decrease each year.

Annual percentage rate (APR)
The annual cost of a loan to a borrower. Like an interest rate, the APR is expressed as a percentage of the loan amount. Unlike an interest rate, however, it includes other charges or fees to reflect the total cost of the loan. The Federal Truth in Lending Act requires that every consumer loan agreement disclose the APR. Since all lenders must follow the same rules to ensure the accuracy of the APR, borrowers can use the APR as a good basis for comparing certain costs of loans.

Application fees
Non-refundable fees paid when you apply for your loan. They may include charges for property appraisal, a credit report, etc.

Appraisal or appraised value
An informed estimate of the value of property. When made in connection with an application for a loan secured by a home, it's usually made by a professional appraiser. It's sometimes called a property valuation.

Appraisal fee
The charge for estimating the value of property.

Appreciation
An increase in the value of property over time. Important factors in a home's appreciation are its location and condition, and the selling price of similar homes in the area. Appreciation increases the amount of equity, which may also increase the amount you can borrow for a home equity loan or line of credit. The opposite of depreciation.

Asset
Property or a possession of value that a lender may be willing to accept as collateral to secure repayment of debt. For example, real estate, stocks, mutual funds, cash and automobiles are all assets.

Assumable
When you sell your home, your buyer may be able to qualify to take over your existing mortgage at your current rate. This can be beneficial if interest rates have risen above the rate you're currently paying on your mortgage. The lower-interest rate benefit may make your home more affordable to prospective homebuyers.

Available funds
The total amount of money available to you from your own savings and/or other sources that can be used for your down payment and the closing costs associated with a loan.