Purchasing a home can be a complicated process, not least of all because negotiating a loan with a mortgage provider means wrapping your head around a host of new terms and concepts.

Fortunately, you don’t have to be an industry insider in order to grasp the ins and outs of buying a new home. To help you make sense of it all, we at A and N Mortgage have compiled a glossary of words that are used in the mortgage lending business.

Adjustable-Rate Mortgage (ARM) – A special type of mortgage with an interest rate that varies rather than remains fixed, so payments will rise and fall as the market fluctuates.

Amortization – A fixed repayment schedule that calls for a series of regular (usually monthly) installments.

Annual Percentage Rate (APR) – The annual cost of borrowing money, or the yearly rate of a loan. In addition to interest, it includes all the other cost of funds, such as lender fees and mortgage insurance.

Biweekly Mortgage – A specific payment plan that splits monthly payments into two installments, due every two weeks. By increasing the frequency of payments, borrowers decrease the total interest owed.

Call Option – An agreement that gives a mortgage lender the right (but not the obligation) to demand the full mortgage at the end of a specified period of time.

Closing Costs – Fees (typically totaling anywhere between 3% to 6% of a mortgage) charged by a real estate agent or mortgage broker during the transaction and due on completion of a loan agreement.

Deed – A legal document that officially transfers a home or piece of property to another owner.

Down Payment – The amount of money due up front when buying a house. Calculated as the difference between the total purchase price and the mortgage amount.

Equity – The value of the property currently held by the owner. Calculated by subtracting the outstanding mortgage balance from the current market value of the property.

Fixed-Rate Mortgage – A mortgage that comes with an interest rate that remains fixed, or unchanging, over the entire term of the loan.

Graduated Payment Mortgage (GPM) – A mortgage that demands increasingly large payments as time goes on. Typically starts off low, increases for several years based on set intervals, and then levels off.

Home Equity Loan – A specific type of consumer loan that allows homeowners to borrow money using the equity they currently hold in their property.

Interest – The cost of borrowing money, expressed as an annual percentage of the amount borrowed.

Joint Liability – When two or more parties share liability, and therefore the risks, of a debt.

Lock or Lock-In – The guarantee of a fixed interest rate for a specific period of time.

Market Value – The current price of a home, taking into account a buyer’s willingness to pay and a seller’s asking price.

Mortgage – A specific type of loan, expressed in a document that covers the purchase price of a piece of property.

Mortgage Broker – An intermediary who secures financing for people who want to buy a property.

Payment Cap – A payment cap that sets a limit on the amount by which an adjustable rate mortgage can reach.

Prequalification – Before agreeing to provide a mortgage to a potential homeowner, a mortgage lender will first determine how much money the buyer can afford to borrow by asking them to prequalify for a mortgage.

Principal – The total amount of money, not including interest, that is borrowed.

Refinancing – Securing a new loan in order to pay off another loan on the same property.

Simple Interest – Interest accrued only on the principal balance, calculated by multiplying the interest rate by the principal, and again by the time elapsed.

Term – The life of the loan or the total time until the final amount is due.

Variable rate – An interest rate that rises and falls based on a set index.