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Applying for a mortgage means taking a large financial step. You will hear many strange terms throughout the process. Becoming familiar with these terms will help you feel more at ease.
Adjustable Rate Mortgage (ARM) :
A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
Amortization :
The process of gradually reducing a debt through installment payments of principal and interest, versus paying
off the debt all at once.
Amortization schedule :
A table which shows how much of each payment will be applied toward principal and how much toward interest
over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
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