Lenders toss around a lot of industry jargon. That can be extremely frustrating when shopping for a loan. We try to talk about the loan process in simple, easy-to-understand terms. Hopefully defining a few necessary terms will make the process more friendly... and if it still seems greek to you, please don't hestitate to call or email us. At Spruce Mortgage, we're here to help.

Adjustable rate mortgage (ARM) Also known as a variable rate mortgage, the interest rate on this mortgage changes each term in good times and bad. This is a good mortgage to have if you don't plan to stay in your home for long.

Annual percentage rate (APR) The real number to watch. It’s the rate that reflects your mortgage as a yearly rate plus points and other credit cost-- the true cost of your loan. Since different lenders charge different rates for various fees, the APR lets you more easily compare one loan to another.

Assessment This is another way of saying "local property value for tax purposes." The value of your property is set by a local municipality and assessed according to that local office.

Closing The fun part for a new purchase: Where buyer and seller sign a pile of papers and shake hands. Then you can breathe a big sigh of relief. The fun part for a refinance: Where the owner signs another pile of papers and may walk away with money in their pocket and/or a lower rate and a smile on their face.

Credit Report This is a report that tells a lender how well you’ve handled credit in the past. A good credit report makes the process easier. A spotty report means you may be a higher risk and may be subject to higher interest rates.

Debt-to-Income Ratio Take your monthly debt payments and divide that by your gross monthly income. That’s your Debt-to-Income ratio. This tells a lender how much debt you have and also helps to determine how much you are able to borrow based on the lenders' guidelines.

Equity How much do you owe on a property? How much is it worth? The difference (assuming your debt is lower) is the equity. Higher equity makes approving a refinance or second mortgage an easier process.

Escrow This is an account held by the lender into which you pay money for tax or insurance payments.

Fixed Rate Mortgage The mortgage to have if you plan to keep your house a long time. The percentage rate stays the same for the life of the loan. Usually 15-, 20- and 30-year increments.

Mortgagee Us. The lender.

Mortgagor You. The borrower or homeowner.

Origination It’s our fee to oversee the transaction in its entirety.

Points Probably one of the more confusing terms in lending. A point is 1% of your loan (if you’re borrowing $100,000, one point is $1,000). Points are, actually, up-front interest payments. The goal of paying points is to buy down your interest rate and secure a lower monthly payment.

Principal It’s the amount of debt, not counting interest, left on your loan.

Private Mortgage Insurance (PMI) This is something common for first-time home buyers. If you have, less than 20% of the loan amount for a down payment, you may be required to carry private mortgage insurance.

Recording Fees This is a fee charged for recording a real estate transaction with your town or city, making the mortgage, note and deed part of the public record.

Servicing This is everything a lender does to keep a loan in good standing- collection of and disbursements of payments, taxes, and insurance.

Survey When guys in orange vests - registered land surveyors - go to the property and take measurements with which to draw an accurate boundaries map.

Sweat Equity Say you install new kitchen tiles yourself. Or you replace some windows. Or you install a new lavatory. What you improve increases the value of your home. That extra value is "sweat equity.

Title (aka Deed) A paper that says you legally own a property.

Title Insurance A protection policy in case there’s a dispute about who actually owns a property, when two or more parties claim they have an interest in the property.

Title Search This is when someone actually goes to the registry of deeds and looks into the history of a particular piece of property to determine who owns it, and if anyone can lay claim.

Underwriting This is when a lender makes the actual decision to lend you money or not. It is not a personal decision but related to the business of qualifying for and purchasing a home. Underwriters look at your credit, employment, assets, property appraisal, and other factors.They evaluate the risk related to lending  money to you, and then they, hopefully, approve your loan.