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.



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

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

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 © 2018 Community First Guam Federal Credit Union. All rights reserved.

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