Adjustable Rate Mortgage (ARM): A mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly payment amount, however, is usually subject to a Cap.

Blanket Mortgage: A mortgage covering at least two pieces of real estate as security for the same mortgage.

Declining Balance: The decreasing amount owed on a debt as monthly payments are made.

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Federal Housing Administration (FHA): A federal government agency that assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

Gross Monthly Income: The income you earn in a month before taxes and other deductions. Under certain circumstances, it may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

Inspection Certificate: A document verifying that a property is as described. The inspection is usually performed by a designated agent and may be accepted in place of a survey.

Maturity: The date when a note or other obligation becomes due and payable.

Pre-Payment Penalty: A fee charged by a lender if the borrower pays the loan off early, generally to make up for interest the lender anticipated earning but will not earn as a result of the payoff.

Rate Cap: The limit on the amount that the interest rate on an ARM can increase or decrease during any one adjustment period.

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