glossary of mortgage terms

  • Adjustable-rate mortgage (ARM) – A mortgage having an interest rate that can change periodically, based on a financial index.
  • Amortization – The gradual reduction of the principal of a mortgage by schedule installment payments.
  • Amortization Schedule - A schedule that shows the portions of each payment that is applied to interest and to principal.  It also shows the loan balance remaining after each payment.
  • Annual Percentage Rate (APR) – Your APR is a total cost of credit stated as a rate.  It is generally higher that your interest rate, because the APR takes into consideration all the costs of your loan, over the full tern of the loan.
  • Application Fee – the amount a lender charges for processing a loan application; usually non-refundable.
  • Appraisal – A professional assessment of the market value of a property.
  • Appreciation – Increase in value of a property.
  • Cap – A limit set on an Adjustable Rate Mortgage as to how much the interest rate or monthly payments may increase.
  • Cash Reserve – A requirement of some lenders that the buyer or borrower will have cash left over after closing to make the first two mortgage payments.
  • Clear Title – A title to property that is free of liens and legal questions as to ownership.
  • Closing – The legal procedure in which the transfer of property becomes final.
  • Closing Costs – Costs incurred by the buyer and seller in transferring ownership of a property.
  • Closing Disclosure – A document established under the Consumer Financial Protection Bureau that provides final details about the mortgage loan you have selected.  The five-page sums up the terms of your loan and what you pay at closing.
  • Closing Statement – A statement showing the various closing costs and separates who is responsible to pay the itemized costs.
  • Commitment Letter - A Lender’s formal notice to a borrower that a loan has been approved, states the terms and conditions of the loan that the borrower must satisfy.
  • Condominium – A form of property ownership in which the owner holds the title to an individual dwelling, plus interest in common areas of a multi-unit project.
  • Condo Fee – (or Homeowners association dues) – The monthly maintenance condominium unit ( or planned unit development) owners must pay to cover common area expenses.
  • Contingency – A condition that must be met before contract is legally binding.
  • Co-Signer – A person who signs and assumes joint liability with another person for a repayment of a debt.
  • Covenant – A clause in a mortgage that obligates or restricts the borrower and which, if violated can result in foreclosure.
  • Credit Report – A report of an individual’s credit history prepared by a credit bureau or credit agency and used by a lender to determine an applicant’s creditworthiness.
  • Deed – The legal document conveying title to a property.
  • Default – Failure to fulfill and obligation or to comply with other mortgage conditions.
  • Delinquency – Failure to pay an outstanding debt.
  • Deposit – Cash the buyer pays to the seller when both parties sign a formal sales contract.
  • Down Payment – The part of the purchase price of a home which the buyer pays in cash upfront; not included as part of the loan.
  • Earnest Money – A deposit given to the seller by the buyer when submitting an offer to show commitment about buyer a property.
  • Equal Credit Opportunity Act (ECOA) – A federal law prohibiting lenders from denying loans on a basis of the borrower’s race, color, religion, national origin, age, sex, marital status, or recipe to income from public assistance.
  • Equity – The difference between the market value of a property and the owners outstanding mortgage balance, measures the degree of ownership.
  • Escrow – The holding of documents and money (such as a deposit) by a neutral third party prior to closing.  Also an account held by the lender into which a homeowner pays month for taxes, insurance and other premiums.
  • Fannie Mae (FNMA) – An acronym for the Federal National Mortgage Association.  Fannie Mae purchases mortgage loans originated by lenders and sets guidelines that lenders must follow to qualify prospective borrowers.
  • FHA Loan – A mortgage insured by the Federal Housing Administration.  Down payment may be as little as 3 percent.
  • Fixed Rate Mortgage – A mortgage in which the interest rate does not change during the entire life of the loan.
  • Foreclosure – The legal process by which a mortgage property may be sold when a mortgage is in default.
  • Freddie Mac (FHLMC) – An acronym for the Federal Home Loan Mortgage Corporation.  A corporation that purchases mortgage loans originated by lenders and sets eligibility requirements to follow and qualify prospective borrowers.
  • Hazard Insurance – Insurance to protect the homeowner and lender against physical damage to the property from fire, wind, vandalism, and other hazards.
  • Home Equity Loan – A loan based on the borrower’s equity in his or her home.
  • Homeowners Insurance –   This is an Insurance policy that combines hazardous insurance and liability coverage for the property.
  • Interest – The cost for borrowing money.
  • Interest Rate Cap – A provision of an Adjustable rate mortgage that limits how much the interest rate can increase per adjustment period.
  • Lien – A legal claim against a property that must be paid when a property is sold.
  • Lifetime Cap – A provision of an Adjustable rate mortgage limiting the total increase in the interest rate over the life of the loan.
  • Loan to Value Ratio (LTV) – The ratio of the amount of the potential mortgage to the value of the property that is offered, expressed as a percentage.
  • Lock in rate – An interest rate the Lender guarantees to the borrower provided the mortgage is closed within a certain time period.  The borrower pays a fee for this guarantee.
  • Margin – The set percentage the Lender adds to the index rate to determine the interest rate of an Adjustable rate mortgage.
  • Mortgage – A legal document that pledges a property to the lender as a security for payment of a debt.
  • Mortgagee – The lender in a mortgage agreement.
  • Mortgagor – The borrower in a mortgage agreement.
  • Negative Amortization – Payment terms, under which the borrower’s monthly payments are insufficient to cover interest due, thus increasing the loan balance.
  • Note – A legal document obligating a borrower to repay a loan at a stated interest rate during specified time period; this is secured by a mortgage.
  • Origination Fee – A fee paid to a Lender for processing a loan application, stated as a percentage of the mortgage amount, or points that is due at closing.
  • Owner Financing – A purchase in which the seller provides all or part of the financing for the buyer.
  • Payment Cap – A provision of some Adjustable Rate Mortgage loans limiting how much the borrower’s payments may increase, regardless of how much the interest rate increases.  This may result in negative amortization.
  • PITI – An acronym for Principal, Interest, Taxes and Insurance and is generally the components of a monthly mortgage payment.
  • Points – A one-time charge by Lender to increase the yield of the loan.  Equal to one percent of the loan amount and paid at closing.
  • Prepayment Penalty – A fee some lenders charge to a borrower who pays off a loan before its due date.
  • Prequalification – The process of determining how large a loan the prospective homebuyer can qualify for; this process is initiated prior to submitting a mortgage loan application.
  • Principal – The amount originally borrowed.  A certain amount of a monthly payment that reduces the amount owed in a loan.
  • Private Mortgage Insurance – Insurance provided by a nongovernment insurer to protect a lender against loss if a borrower defaults.  It is usually required when a loan has a loan to value greater than 80 percent.
  • Purchase and Sales Agreement – A legal document with specified terms and conditions and grants a buyer to purchase and the seller to sell.
  • Real Estate Agent – A person licensed to negotiate and transact the sale of real estate; works on behalf of the seller, unless designated as a buyers broker.
  • Refinancing – The process of obtaining a new mortgage, usually at a lower rate, to repay and replace an existing mortgage.
  • Right of First Refusal – An owner’s promise to let someone make a first offer on a property, or to match the amount offered by another party.
  • Second Mortgage – A second mortgage behind the first mortgage on a property.  The rights of the second mortgage holder are subordinate to the rights of the first mortgage holder.
  • Settlement – The process of settling a transaction.
  • Survey – A drawing showing legal boundaries of a property and the location of the structures on it.
  • Term of Mortgage – The length of time you are given to repay the loan.
  • Title – A legal document establishing the right of ownership.
  • Title Insurance – Insurance to protect the Lender (Lender’s policy) or the buyer (Buyer’s policy) against loss arising from disputes over property ownership.
  • Title Search – A detailed examination and process of retrieving documents as to the history of the property to identify legal owner, issues and regulations to that property.
  • Transfer Tax – State or Local tax payable when title passes from one owner to another.
  • Truth in Lending Act – A federal law that requires lenders to fully disclose to applicants on the cost, terms and conditions of a mortgage.  It also gives the applicants the right to cancel certain transactions that involve securing borrowers primary residence.
  • Underwriting – The process of evaluating a loan application to determine the Lender’s risk.
  • VA Loan – A loan guarantee by the Veteran’s Administration, requiring low or no down payment.


Community First Federal Credit Unions employs enterprise grade security to ensure that your online transactions are confidential and secure and that your personal information remains personal.

238 Archbishop Flores Street, Suite 102, Hagåtña, Guam 96910

Telephone: (671) 472-8210 | Fax: (671) 477-5522

CommTEL Telephone Banking: (671) 472-5783 or 1(877) 472-5783 (From U.S. Mainland or Hawaii)


To report a lost or stolen card, please call the following numbers:

ATM Card:  1-800-523-4175, Credit Card: 1-800-991-4961, VISA® ATM/ Debit Card: 1-800-472-3272


To initiate a VISA® ATM/ Debit Card dispute for errors, unauthorized use, or fraud:1-844-771-9303


To report email abuse, malicious activity, or network issues please contact:

Copyright © 2021 Community First Guam Federal Credit Union. All rights reserved.

Slogan text: Financial Solutions For You.
Equal Housing Opportunity Logo

Federally insured by NCUA. Equal Housing Lender. NMLS ID#634505