Fixed Rate Mortgage

• Fixed rate mortgages offer a single rate for the entire term of the loan. These are good for locking in a low rate or for individuals who want the security of knowing that they will have a consistent monthly payment.
  
  

Adjustable Rate Mortgage

• Adjustable rate mortgages, or ARMs, have a fixed interest rate for the start of the term, then adjust to the market average. For example, a 5/1 ARM would have a fixed rate for the first five years, then adjust to the market rate once a year after that. These are good for those who sign a mortgage when rates are high.
  
  

Down Payment

• This is the amount of the home's cost that the buyer pays at the start of the loan. A larger down payment can result in better terms for the loan because it helps assure the lender that payments will be made.
  
  

Annual Percentage Rate

• Annual Percentage Rate, or APR, represents the rate of interest that will be charged on the loan. Lower rates are usually given to people with good credit scores.
  
  

Points

• Points are fees paid at the start of the loan. Each point costs 1 percent of the value of the loan, so if you had to pay two points on a $250,000 loan, your fee would be $5,000. Sometimes banks will allow you to pay extra points for a lower interest rate.
  
  

Term

• The term is how long the loan has to be repaid. The longer the term, the lower the monthly payments, but the greater the amount of interest that will be paid over the life of the loan.