Good faith estimate - This is an estimate of the fees to the paid at the time of loan closing and includes costs such as escrow charges, lender charges, property taxes, agent commissions, etc. Mortgage Broker charges are usually hidden.

Government National Mortgage Association (GNMA) - This is a government agency which acts as a guarantor of mortgage securities that are issued against FHA and VA mortgages. It is also referred to as Ginnie Mae.

Grace period - The extra time period within which a loan payment can be made, after it has crossed it’s actual due date, usually five days.

Graduated payment mortgage (GPM) - A mortgage type in which the initial payments are small, but which increases at a set pre-determined rate. This is commonly used for student loans which anticipate an increasing income stream. Less commonly used for home loans in the US.

Graduation period - The interval during which increasing payments are to be made in a Graduated payment mortgage. The interval ends when you arrive at a fully amortizing schedule

Graduation rate - The rate of increase in payments made in a GPM.

Homeowners insurance - Insurance policy taken out by a homeowner on their home to protect them in the event of loss or damage to property.

Home equity line of credit (HELOC) - This is a revolving credit which is based on a home’s equity. The homeowner can issue checks against the credit amount credited on equity and the interest paid on the borrowed amount can be used for tax deductions.

Home equity loan - Loan provided based on the home’s equity. It is used to bridge the gap between the 80% the first mortgage provides and the house sales price. It will be more expensive than the first mortgage as it has a lower lien priority and thus is more riskier to the issuer. The difference between a Home Equity Loan and a HELOC is that a Home Equity Loan pays all the money up-front and then is retired over time. With a HELOC the money is available, so that if you pay off a HELOC you can still borrow money against the available credit line. HELOCs are almost always adjustable rate and are usually carry a more expensive rate.

Housing expense - This is an expense that includes payments to be made out towards mortgage, hazard insurance, property taxes, and homeowner association fees. Also should include cost of repairs, maintenance, and utilities.

Housing expense ratio - This ratio expresses the housing expenses incurred against the total monthly income. Most underwriters determine that this ratio should fall between 28 and 36%.

HUD1 form - A form made by a closing agent detailing expense to be paid such as closing costs, payments to be made to escrow accounts hazard insurance mortgage insurance, loan fees, and commissions. HUDI form is also known as closing statement or settlement sheet.

Hybrid ARM - This is a type of adjustable rate mortgage, in which the interest rate remains fixed for a particular time, after which the interest becomes an adjustable one. The term in which interest rate is fixed lasts usually 3, 5 or 7 years.

Initial interest rate (Teaser Rate) - This is the initially low interest rate used to attract borrowers. The borrower will pay this for a short while on an adjustable rate mortgage, after which the rate bounces back to the usual one

Initial rate period - The initial period for which the initial rate of an ARM holds. This period can be something between 3 months to 10 years.

Interest accrual period - This refers to the period over which interest that has to be paid to the lender, is calculated. This can be Daily, Bi-Weekly, Monthly, or Yearly.

Interest cost - A measure of the interest costs incurred by a borrower on the mortgage, through the entire loan period. It tells borrowers about the cost of the mortgage to them over the lifetime of the mortgage.

Interest-only mortgage - As the name suggests, in this mortgage type the borrower pays only the interest. At the end of the interest only term, the payment reverts to that of a fully amortizing loan. The increase in payment is quite large and most loans will need to be re-financed at this point.

Interest payment - The amount of money paid to cover the interest expense. A mortgage payment can cover two components: the interest expense and the principal.

Interest rate - The cost of borrowing money, expressed as a percentage, usually over a period of one year.

Interest rate adjustment period - The adjustment period during which the interest rate on an ARM changes. For example in a 5/1 ARM, the initial rate period is 5 years after which the rate adjusts every year subject to caps.

Interest rate ceiling (lifetime cap) - The highest rate to which the interest can shoot up in an ARM. This is expressed in the form of percentage points above the initial interest rate.

Interest rate floor - The lowest rate to which interest can drop-down in an ARM. It is more likely to see ceilings on an ARM than floors.

Interest rate increase cap - The maximum level to which interest rates can raise on an ARM. It is expressed in the form of points and usually not more than 1 to 2 points is seen, but there is a possibility of the points going up to as high as five, if the initial period’s rate is five years or above.

Interest rate decrease cap - The maximum level to which interest rates can decrease on an ARM. It is expressed in the form of points and is usually about 1 to 2 points.

Interest rate index - The index used to fix the interest rate for an ARM.

Jumbo mortgage - A loan type that allows for much larger amounts to be borrowed than the limits set by the Federal National Mortgage Association and the Federal Home Loan. They carry with them a high rate of interest as they cannot be funded by these two government agencies.

Junk (garbage) fees - Fee to be paid to the lender for loan services. It is expressed in dollars and not as a percentage of the loan amount.