Financial Terms to understand your loan/mortgage process

Amortization – The length of time that you have to pay the mortgage in full.

Appraisal – The estimated fair market value of the home. Lenders need this in order to approve your mortgage.

Co-signer – A person who signs the home loan with you stating that if you default on the loan, he/she will take over the payments.

Equity – The difference between the amount owing on a mortgage and the value of the home.

Principal – The amount of money you owe on the mortgage – it does not include the interest.

Refinance – Getting a new mortgage on your home and cancelling out your existing mortgage.

Security – This is also called collateral and is usually the home. If you do not repay the mortgage, the lender can foreclose on the loan and take the home.