For those of you on the hunt for a home, you may be somewhat familiar with the mortgage process. From shopping around for the best rate, to figuring out the length of loan you want, applying for a mortgage is no small task. Below are 11 common terms that you should familiarize yourself with while learning which loan is right for you.

Acceleration clause – Stipulation in a mortgage agreement that allows the lender to demand immediate payment of the entire loan balance if any scheduled payment is missed.

Adjustable rate mortgage (ARM) – Mortgage loan on which the interest rate falls and rises with changes in prevailing rates. The mortgage rate is tied to a selected index and may be adjusted annually. Also called a variable rate mortgage.

Annual percentage rate (APR) – Combines the interest rate with other loan costs, such as points and loan fees, into a single figure that shows the true annual cost of borrowing.

Assumption of mortgage – Taking title to property that has an existing mortgage, and being personally liable for its payment as a condition of the sale.

Balloon loan – Mortgage loan in which a larger final payment becomes due because the loan amount was not fully amortized.

First mortgage – Mortgage on a property that is superior to any other. It is the first to be paid in the event of foreclosure.

Graduated payment mortgage – Mortgage loan for which the initial payments are low but increase over the life of the loan.

Maturity date – Date on which principal and interest on a mortgage or other loan must be paid in full.

Origination fee – A charge by the lender for granting and processing a new mortgage loan.

Private mortgage insurance (PMI) – Required by most lenders for conventional loans with a down payment of less than 20 percent. Insurance is paid by the borrower and guarantees the lender will not lose money if the borrower defaults.

Second mortgage – Lien on property that is subordinate to a first mortgage. In the event of default, the second mortgage is repaid after the first. Also called a junior mortgage, and in some circumstances, a home equity loan.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.