Mortgage terms explained
FRM - Fixed Rate Mortgage - A home loan with an interest rate that will stay the same for the life of the loan. Loans are usually made for 15, 20 or 30 years.
ARM - Adjustable Rate Mortgage - At first, the interest rate is lower than Fixed Rate Mortgages. Interest changes based on an index such as the one year Treasury rate.
Balloon Mortgage - Normally a fixed rate loan with low payments for 5 or 7 years. Then, the remaining loan is due and often refinanced at a higher interest rate that will adjust annually.
APR - Annual Percentage Rate - Interest rate that includes all the financing costs of the mortgage -- points, origination fees and other finance charges, plus the mortgage interest.
PITI - Principal, Interest, Taxes and Insurance - Normally these are the four items that make up your monthly mortgage payment to the lender. Some lenders let you pay the taxes and insurance yourself.
Points - A fee the lender charges. Each point is 1% of the total amount of your mortgage. Usually, the lower the interest rate, the more points you'll pay.
