BALLOON PAYMENT – Payment made at the end of a loan to make up the difference between the amount of the loan that has been paid by monthly payments and the total amount due on the loan. Typically this occurs with interest-only loans and other loans designed to have low monthly payments with a balance due to the end of the loan.

CLOSING COSTS – Costs charged by lenders, escrow companies, state and county governments and others for the final transfer of funds at the close of a mortgage loan.

COLLATERAL -- Something of value which is pledged for a loan. If the loan is not repaid as per the agreement (a default), then the lender takes possession and ownership of the collateral which has been pledged to repay the loan.

CREDIT SCORE – Number assigned by a credit reporting agency which reflects your credit history and your current credit rating. Many lenders require a certain credit score in order to approve a loan.

DOWN PAYMENT – Payment made by a borrower toward the purchase price of the home or other real estate being purchased. Often the down payment will be a percentage of the purchase price, such as 10 percent or 20 percent. Lenders generally look more favorably on borrowers who put up a large down payment.

EQUITY – Current value of a piece of property minus the current financial encumbrances on that property.

FIXED-RATE LOAN – Loan with an interest rate and payment which does not change for the life of the loan. Typically homeowners obtain a 15-year, 30-year or 40-year fixed-rate loan, although shorter fix-rate loans are available.

FORCLOSURE – When a lender takes back the title to a property due to the borrower being unwilling or unable to make payments on the mortgage loan.