Buying a home: Mortgages

Market analysis

an estimate of the price of a home based on the prices of similar homes in the area

private mortgage insurance (PMI)

may be required if your diwn payment is less than 20% of the home’s value

points

a fee charged by the lender when a mortgage loan is provided; stated as a percentage of the mortgage loan amount

fixed-rate mortgage

a mortgage in which a fixed interest rate is specified until maturity

adjustable-rate mortgage (ARM)

a mortgage where the interest owed changes in response to movements in a specific market-determined interest rate

caps

maximum and minimum fluctuations in the interest rate on ARM

graduated payment mortgage

a mortgage where the payments are low in the early years and then rise to a higher level over time

balloon payment mortgage

a mortgage where the monthly payments are relatively low, but one large payment is required after a specified period to pay off the mortgage loan.

mortgage refinancing

paying off an existing mortgage with a new mortgage that has a lower interest rate

rate modification

may be available to some fixed-rate mortgage holders

refinancing analysis

compare the monthly savings to the cost of refinancing